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Day Trading And Swing Trading
Can we use the fundamentals, ” to trade news in the short term “as well as the long term?”.
Now, the quick answer to this question is, yes, you can trade news in both the short term and the long term using fundamental analysis.
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The secret ingredient for trading the news, and whether that is short term, medium term, long term, is always going to be, the expectations that the market has, expectations for currencies, expectations for actual news events for economic data, expectations for geo-politic events, all of those expectations, basically fit into how the market responds to incoming news.
Now, it’s important to know that the fundamentals working, either the short term or the longer term, in the short term we usually refer to the fundamental drivers as, market sentiment or the current sentiment. And in the medium to longer term we usually refer to it as the macro-economic picture or macro-economic drivers.
So, whether you want to trade in the short, or the medium term or the long term, it really just depends on the time horizon that you’re look in to trade, but more importantly on what the expectations are for that short and longer term horizons.
For example, if the longer term fundamental buyers for a currency is bearish, but there are significant, let’s say, bullish economic data surprises or geo-political events, that goes against that current bearish expectation that can simply provide a way for you to sell that currency after a rally from a much more attractive level, once the short term buyers realigns back towards the bearish fundamentals.
Looking for more short term trades, you would ideally want the short term sentiment and surprise in the market from news to align with each other, for example, let’s assume we have a short term, bullish sentiment on a currency and there are expectations for an economic data point to come in very bad, so very bearish, but there is a surprise positive deviation in the data.
Basically, it comes out much better than the markets were expecting, that would be in line with that short term bullish sentiment and would provide a great trading opportunity, basically, trading in line of that data point surprise, in line of that short term bullish sentiment.
So, you would also consider at times when the fundamental buyers as well as the short term buyers aren’t aligned, those are normally some of the best trading opportunities and can be traded from either a short term or a longer term perspective.
I hope that helps with the question, if there’s any more questions don’t hesitate to ask us.