It depends on the trade.
If I’m trading an index or FX I’ll use fundamental analysis to see where the economy is at. I’ll be firing up my economic calendar to look at data on:
- Unemployment figures
- GDP growth
- Inflation
- Imports/exports
- Government borrowing
- Debit vs GDP ratio
- Deficit figures
- Interest rates
I might also look at analyst sentiment to help justify my long or short position, though a word of warning: Even the top analysts at Wall Street firms get it wrong.
One caveat is that if I’m trading an FX pair with the USD as the base, I don’t worry as much as about fundamental analysis because of the dollar’s position as the global reserve currency. But I will still check my economic calendar for any potential high impact events.
Either way, I’ll still look at charts and technical indicators.
