Fundamental currency analysis , is it worth it?

it definitely has quite an effect, if the upcoming data has drastic changes or even a small change can make a difference. what i do is, because it is hard to monitor, i read trade reports, posted by brokers like fxview or ICM, that way i learn how to analyse and i get a picture of what's coming next.

 

Trade imbalance data is used widely. I haven't used it in algo models but intend to look into the datasets. I'm skeptical of trading using spot currency because of the overnight costs and stuff. Though I wouldn't rule out currency futures (used widely in CTAs trend following model).

That being said, I'm using spot to hedge USD effect (at annual rate of 1%) in my home currency (SGD) because of the mumbo jumbo money printing by Fed and US govt. So far the hedge paid off.

 

Price action is a lagging indicator. If you are trading based upon price action, you have already missed the move. In the fast-paced nature of FX markets, you are too late.

Instead, understand the drivers of currencies, and then you can glance at a price chart to see where the currency has moved. Most g10's are going to be driven by key themes. If you aren't aware of these themes, you are flying blind and the money you make is from pure luck.

 

There is some logic in your recommendations and it should be used

 

Before starting the analytical process, it is worthwhile to clearly determine the time frame of the transactions to be concluded, since the choice of one or another study method directly depends on their duration.

 

Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation's currency. Here we look at some of the major fundamental factors that play a role in a currency's movement.

 

But many people mainly focus on technical analysis alone, when in reality fundamental analysis is a good as the former one too. The bottom line is that BOTH should be used.

 

If you look closely, you can really make good money in the intricacies of fundamental analysis.

 

I have heard that most people rely only on the technical analysis, but in my opinion Fundamental analysis is equally important. Fiscal and monetary policy along with inflation numbers are very important numbers that can derive the market prices.

 

Try to remain active and updated with the current news in order to make a right entry/exit at the right time.