Fundamental currency analysis , is it worth it?

Hello everyone

I have been trading for roughly 2+ years and am exploring various methods of incorporating fundamental analysis into my trading.

I am more than familiar with the appropriate drivers of a currency (economic performance of GDP, Inflation, IR, CB expectations, geopolitical risk) and was wondering whether anyone has found any particular aspects to be most helpful (such as a filter checklist) or whether the entire endeavor is useless as the market may have already priced in the information and/or be focusing/being used for another aspect entirely.

Lastly are there any useful quantitative sentiment analysis tools as these seem to be the primary cause of opportunity (as it may cause the price to move against the underlying fundamentals).

Cheers

 

Real Rates and Terms of Trade I think have a big influence on currencies.

 

I trade forex long-term (2-5 days holding periods on average) off the D1 charts and have found all relevant FA is contained within the charts. A while ago I did find that I was personally interested in economics and geo-politics so I read up on it quite a bit - but it did nothing for my trading decisions.

 

Central bank policy in the context of fiscal policy/economic situation/relative performance will help you understand the trend in the mid-term. In the short run, funding decisions by corps, gov't, and such (e.g. balance of payments) moves the market. "Spot check" on a chart, but 99% of your analysis should be information driven.

You can't know what's going on in an asset by looking at price. You can compare price to what you know to figure out if there is value.

 

Prices are the dog, fundamentals are the tail.

 

Actually, it's the opposite.

 

@long and short

Thanks for the input regarding the drivers, it does indeed seem to be the case that the fundamental trends help you at least understand the chances of the price continuing in a certain direction (over a longer period).

One crucial aspect of PA is that it can help you determine which prices important decisions were made in the market as well as how aggressively or not that decision was made, in turn, allowing you to discern a probability of a certain outcome.

All in all, I would and have chosen TA as the standalone analysis but am of the impression fundamentals can serve as a strong filter to better manage risk.

 

I am of the opinion that in order to be successful in making a good profit, you need to know two types of analysis and be able to apply them

 

True! But do you think, one of them has a greater weightage? Or both are equally important?

 

First, you really need to figure out what each of the analyzes is, and understand which strategy you will use short-term or long-term.