fundamental analysis: headline news

Question 1

what are headline news?

Answer 1

Real-time forex news of the different fundamental events worldwide

Question 2

how much of the fundamental analysis are the headline news?

Answer 2

70%

principal tool to create our fundamental idea

Question 3

what us the best forex website for headline news?

Answer 3

ForexLive is the best website to read and research everything that is going on with the FX Market

Question 4

why is ForexLive is the best website to read and research everything that is going on with the FX Market?

Answer 4

4 analysts that follow every news source and post on the site 24/7

each post is a fundamental headline

Question 5

what are the most important parts of the ForexLive site?

Answer 5

The Must Read section for the most important news of the moment

Trading Session Wraps to keep yourself updated

Question 6

What should you look for when you are reading, researching, analysis headline news?

Answer 6

goal is to accumulate important fundamental information and put it in your fundamental bag to grow your understanding/knowledge and later on form your fundamental idea

Question 7

What are the main trading sessions?

Answer 7

Tokyo

London

New York

Question 8

Tokyo trading session

Answer 8

Asians grinding

the currencies that move are JPY, AUD, NZD

Question 9

London trading session

Answer 9

Europeans be grinding

Currencies who are moving: GBP, EUR, CHF

Question 10

New York trading session

Answer 10

Americans be grinding

Currencies who are moving: USD, CAD, GOLD

Question 11

why is the New York Session volatile and bipolar?

Answer 11

because all of the political/economical relationships with other countries

Trump

Financial institutions agendas (outside of trading)

Question 12

what are the characteristics of the JPY

Answer 12

JPY is inversely correlated with CNY

JPY is a safe haven in asia.

When things are bad in asia, the JPY goes up

Question 13

Why is the JYP is a safe haven?

Answer 13

because they have a strict monetary policy

They handle their economy very seriously and safely

It’s a worry-free investment for investors in asia

Question 14

what are the characteristics of the AUD?

Answer 14

AUD does business mostly with China, it’s economy depends on it

AUD is directly correlated with China’s economy

AUD is a big producer of gold, when gold appreciates it affects AUD positively

AUD little brother is NZD

Question 15

what are the characteristics of the NZD?

Answer 15

NZD is very dependant on AUD, it’s their principal business partner

Since AUD is dependant on China, NZD is indirectly dependant on China as well

NZD has an economy very dependant on dairy products that they export

Question 16

what are the characteristics of the GBP?

Answer 16

Brexit, dependant on brexit news

Relationship with the EU.

After Brexit this currency will move based on that relationship Relationship inside the UK (Ireland, Scotland, England)

Question 17

what are the characteristics of the EUR?

Answer 17

Relationship with the USA, Trump wants to put tariffs on Euro’s cars

Relationship with countries inside of the EU (Very Important)

One country can (positively or negatively) affect the EU as a whole

just a bit of Brexit

Question 18

what are the characteristics of the CHF?

Answer 18

Safe haven of Europe

when EUR is not doing good, CHF will go up

Question 19

what are the characteristics of the USD?

Answer 19

Equities market (Stocks, Indexes, etc)

International relationships (Trump vs China, North Korea, EU, etc)

Housing Market
USD is opposite of XAU (Gold)

Usually inversely correlated to AUD because of XAU and CNY

Question 20

what are the characteristics of the CAD?

Answer 20

Very dependent on oil prices, canada is a big producer of oil

If Oil is up, CAD will be up

Relationship with USD, specific headlines regarding positive/negative issues between both countries can affect CAD

Question 21

what are the characteristics of the XAU (GOLD)?

Answer 21

Safe haven for the whole world, but mainly invested from the US

Question 22

what are the 3 principles that moves/affects the market?

Answer 22

1. When a problem occurs/emerges, the currency will react negatively in proportion to the size of the problem. Same thing for the duration of the negativity.
2. When a solution/good event occurs emerges, the currency will react positively in proportion to the size of the good news. Same thing for the duration of the positivity.
3. If there isn’t any problem or any good news, the fundamental is flat, which means it’s less important and the market is going to move according to technical analysis

Question 23

which type of news is more powerful? why?

Answer 23

negative news is always more powerful than positive news since humans are more sensitive to negativity

Question 24

example 1 (Simulation):

US and North Korea tensions are building up for a few weeks now. North Korea continues to test their new weapon technology, but there has been no attack on the US or any other country.

How do you interpret this fundamental situation?

Positive or Negative? Size of the situation? Duration of the situation? Impact on market?

Answer 24

Tensions are heavily felt on the overall currency market, all eyes are on North Korea.

The situation is quite negative (8/10) because of the fears of escalation and the potential incoming war.

Negativity will last until this problem is solved definitely.

You have to monitor the headlines carefully. Your trading will be focused on this situation.

Question 25

example 7 (Simulation): Report: Multiple rockets fired at US Embassy in Baghdad. No injuries or damage reported. How do you interpret this fundamental situation? Positive or Negative? Size of the situation? Duration of the situation? Impact on market?

Answer 25

Big reaction in risk assets/currencies, however short lived. Since there is no damage made, the market will correct itself pretty quickly. The follow up will be to monitor the situation and see if we have an escalation or a fade away. This will either make the market forget about the event or come back to their original reaction

Question 26

Example 5 (Simulation): The white house is considering tax incentives for more americans for buy stock. How do you interpret this fundamental situation? Positive or Negative? Size of the situation? Duration of the situation? Impact on market?

Answer 26

Even though the headline seems positive, it has absolutely no impact on any currency. This is a speculation headline, does not affect the economy at the moment so there is no reason at all for it to have an impact in the forex market.

Question 27

Example 4 (Simulation): The market expected a FED interest rate CUT, however at 2:30PM, the result came out with being a interest rate HIKE against all odds. How do you interpret this fundamental situation? Positive or Negative? Size of the situation? Duration of the situation? Impact on market?

Answer 27

Very positive reaction, very explosive because of the surprising good news. However very short lived, the market will move on very quickly since there is not much to follow up with (A few days at most)

Question 28

Example 6 (Simulation): A new virus spreads out in China at a very high pace. It is contained for the most part only in China at the moment and the virus looks more like a bad flu than a dangerous toxic pathogen. How do you interpret this fundamental situation? Positive or Negative? Size of the situation? Duration of the situation? Impact on market?

Answer 28

The market reacts very badly at the beginning because of the fear of the virus. After a few weeks, the market understand that the situation is less dangerous than expected at first. The effect of this headlines are almost gone on currencies. However, eyes are still watching closely the development of this situation.

Question 29

what is the most important part of our trading?

Answer 29

Creation of the Fundamental Idea

Question 30

what is the Creation of the Fundamental Idea

Answer 30

Before even looking at the charts, you MUST know in which direction the market is heading