fundamentals in forex, my conclusion

Discussion in 'Economics' started by TGpop, Feb 3, 2010.

  1. TGpop


    After spending some time studying forex fundamentals/economics i've realised that if a currency/pair is trending, then there are obviously fundamentals driving it.

    What i realised is that no fundamental will always have the same affect in the market, one year the carry trade could be the cause, the next year it could be high and consistent GDP,commodities, etc.

    That means that if there is a trend from time X to time Y that during X and Y there are certain fundamentals driving that, and won't be the same year after year. Even if GDP is high and consistent, the trend in a currency may be down, for example low interest rates cause selling due to carry trade investors.

    In other words, whenever there is a market trending, look for the fundamentals which agree with the trend, as they are possibly the drivers of it , and pay attention to those variables and make sure they keep up. But economics isn't always a perfect science and even if you have all the variables lined up something else could , COULD, effect/reverse the trend.

  2. ....but on the other hand.......:cool:
  3. TGpop


    huh ?!?! :confused:
  4. "On one hand, this, but on the other hand, that" said the two-handed economist. Economists can't make up their minds. When they do, be careful. :cool:
  5. I think I see what you are talking about here except the conclusions are too unstable and subjective
    and isn't a calculable solution.
    (I have thought along these lines for years and will have something coded up eventually)

    I would love to see a multiplier index of fundamentals
    be able to be drafted in as an indicator over a Forex Candle Chart with a "predictable fundamental
    equation" line and an actual fundamental equation line. (Like a fast and slow cross)

    I'm sure the big boys have worked on these.
    I will have it coded when I have money to burn.

    The value will have to end up with multitudes of predictable market fundamentals
    and real fundamentals with each one having weight and reference and being tweaked to provide reputable early signals that can be backtested.

    I know it is very doable and one could blend several indicators to make an index
    so if one loses it's market effectiveness ... the index will still work.