Tradeonomics - Four Steps to Trading Fundamental Analysis [Repost]

<font>Fundamental analysis is the use of economic indicator releases to create trading strategies. Many traders rely purely on technical analysis to trade completely ignoring fundamental analysis. In addition, understanding economic indicators isn't enough to trade financial markets. You need a system that you can use to generate profits from trading economic indicators </font>

This book teaches you that system investment bankers use.

Do you know the #1 reason why many retail traders underperform compared to their market counterparts namely - interbank dealers, hedge funds, financial institutions?
Studies suggest that despite retail traders having strong requirements to be well informed they are not. They do not anticipate returns on trades, lack trading acumen and are emotional when trading.

What stops traders from being better informed, improving their trading acumen or reducing emotional trades such as hope and wishful thinking?

It's not easy. To make the connections between economic indicators, financial instrument prices and the central bank's reaction to these indicators is hard.

However, this book simplifies this task. There are just four steps that investment bankers follow to trade financial markets using economic indicators.

Many traders never really understand the "fundamentals" behind the primary trend or reversal of trends nor the linkages between economic indicators, financial markets, and central bank's monetary policy.


The Four steps that we study in this book are - 

Step 1 - Identify the price determinants of financial instruments

Step 2 - Understand how each economic indicator contributes to either economic growth or inflation (we use an economic map to demonstrate these connections)

Step 3 - Classify the impact of each economic indicator on financial instrument prices. We will create this in a spreadsheet using the knowledge gained from this book as well as inputs from online service providers

Step 4 - Create an impact analysis spreadsheet that will assist us in taking positions prior to and post an economic indicator release.


The Use of an Economic Map

We make these connections between economic entities, factors, markets and central bank policies through the use of a economic map . The economic map helps us to understand how each small sub-component aggregates to the larger components, which in turn aggregate to the Gross Domestic Product thus giving us a wider perspective of how entities interrelate with one another.