 Hi, my name's Leon Roeb currency trader and trading coach at trading 180.com and in this video I wanted to answer the question regarding can you swing trade forex successively without fundamental or risk sentiment analysis and The answer that typically follows that from technical analysis traders Is that all you got to do is follow the trend right so higher highs higher lows in combination with With trend indicators, right? So it's just a case of if you see, you know something like this occur Higher high higher low like that, right? And you've seen this happen all you got to do is get in on a Pullback, right? And then that's really what you're looking to do and as long as whatever said indicator is You know, whether it's a moving average whether it's some sort of any at wave, you know You know abcd wave or 1 2 3 4 5 Then that's pretty much all you need to do But I would then ask the question well How do you know if the trend is likely to continue because you know trends don't continue for continue forever, right? You might see the trend what happens is with especially with swing trading You know and on something like a daily timeframe chart and looking out The traders will see the trend after it's made maybe about, you know Maybe a 500 600 800 pit move and then all of a sudden then they want to start jumping in on the pullback, right? and prices might pull back but You know, how are you going to? You know, know whether that's likely to continue. Yeah, likely to continue because ultimately that's what you're gambling on and Also, how do you know whether price is pulling back or if it's actually the beginning of a reversal right because you have situations Where you can have, you know pullbacks Complex pullbacks if you want to call it complex pullback But pullback that might look something like this and it might bounce off of there And then maybe you know come down to maybe something like this Maybe a demand zone down there and then all of a sudden made lower highs lower lows traders might think oh well That's you know, this is is this a reversal or it's just that just a deep pullback, right? And then you might see, you know prices start to make new highs or even prices might come down even deeper, right? It's something like a sixty one point eight percent fib, right? How do you know whether prices? That's just a deep pullback or in fact that that is a reversal, yeah, and so It's very very difficult to just tell from price and you wouldn't be watching this video if you didn't have those same questions, right? And so, you know for your information price does not move simply for the sake of moving right buyers and sellers Within the forex market or any market right any asset class buyers and sellers don't buy and sell assets in large Quantities for no absolutely no reason, you know that's it to have a market that just people are speculating on without no sort of concepts of of value is You know is is is crazy to me is that it doesn't exist, right? You have to have when you have a market that has to be value associated with that market and Fundamental analysis of any asset class is really understanding the current and future potential value of an asset and so What you don't want to do is confuse price with value Yeah, so assets have varying degrees of cheap or are varying degrees of cheap expensive or fair value. Yeah, so You know, otherwise if price was always indicative of its value then Then we would never have an asset that is undervalued or overvalued it and it would never have anything that is cheap or expensive because the price is what it is and You know, you would just say well, that's the value but that doesn't make any sense So, you know, if if you bought a Ferrari someone sold you a Ferrari for for a pound Would you say well, that's the value of the Ferrari? No, you know intrinsically that the Ferrari has an actual value because Fundamental value because of the engineering that's gone into it the materials that's been used on it, etc so everything has a value and so Price, yeah is not always its value, right? So Don't confuse price with value And in the forex world value is determined by interest rates Yeah, so central bank monetary policy inflation and GDP as well as risk sentiment And this is according to the financial institutions who are doing business in forex, right? It's not, you know, Leon Rose in this. This is these are the banks that determine the value of An exchange rate of a currency one currency against another because currencies are trading in pairs And so, you know, you look at examples Like this from from a bank. This is from MUFG Japanese bank. This is the eurozone rate market has moved to aggressively payback expectations for further rate hike This is the fundamental analysis. So it talks about dovish policy monetary policy updates from the Bank of Canada Bank of England in the Fed the Bank of Canada kicked off the dovish dovish repricing by pausing their hiking cycle last week again interest rates pausing the hiking cycle. Yeah, so You know, this is Citibank. So, you know Citibank say on growth So GDP the UK lags with the slowest recovery to pre-pandemic levels of real GDP Future of UK's business model in a post-Brexit world talking about the effects of Brexit on GDP. This is another bank That talks about, you know, this follows the Bank of England Bank of England in December's meeting Etc etc etc and you can read, you know, them talking about why their targets, you know Within the next 12 months versus the euro the pound versus the euro would be, you know, 0.88 cent In that at that price or that exchange rate, yeah And it's not to do with, you know, well price We're just speculating on price and what we see that what they see on the chart price does play a role But the value is what drives price over the medium to long-term in the short-term price is really kind of driven by or typically driven by Liquidity and market makers etc. And there is speculation, but the market is not for, you know, secondary Speculation is secondary. The market is really for big businesses like the banks to do business And exchange in currencies, right? And so Fundamental analysis really is trading alongside the financial institutions. If you don't use Fundamental analysis when you're swing trading, it's you're basically just flipping a coin and it's pretty worse than flipping a coin Right because many traders as you know swing trading was all it was cracked up to be and the easy as it was you again You wouldn't be watching this video So there was definitely something missing in your trading, right? And it is fundamental analysis and one of the ways just one of the ways that you can Use I guess the banks and what they release in their fundamental analysis in a bit of a shortcut is to use kind of bank Forecasts as as a guiding light. Yeah and so many banks Use or publish their their forecasts They have monthly quarterly and these are always constantly updated every every now and then of course because things change But what you want to do is use bank forecasts as your guiding light And I would say, you know, use probably one to three month time horizon or maybe, you know, a quarter To two quarters as your as your as your guiding light. Yeah, as your Is your guide so That way you know that even if you don't necessarily fully understand the fundamentals which I highly recommend you do the banks are actually showing you or telling or forecasting what they think is going to happen with that exchange rate now Does it mean that, you know, they're going to be 100% right all the time? No, no one has a crystal ball And these are forecasts forecasts are not predictions There's a difference forecasting is not predicting predicting deals with Absolutes, you know, I predict that tomorrow it's going to rain and if it doesn't rain then I'm wrong Forecasting is what is likely to happen the probability of something happening, right? We're just forecasting the weather is a forecast, right? We forecast the weather because the weather can be, you know, is ever-changing and And that's why they call it a forecast anyways So what you want to do is find as many as you can bank forecasts Don't you know go with the with the the majority don't go with just one or two Go with maybe if you find 10 or 15 and then maybe, you know, maybe 10 of those 15 are saying that they Forecast the euro dollar to go higher, for example, then you go with the majority This isn't, you know, this is this is opposite to for example retail Trading where if most of retail are saying that they are short on the euro dollar, then you might want to go long the banks typically, you know, the create the market and so and they're doing business and so The majority of the banks are typically not wrong, right? They're not wrong They can be of course, but they're typically not wrong So you all you know as a rule of thumb you want to go with the majority of you know, the forecasts And so what you want to do is zoom out on a daily, you know, potentially weekly chart and then look where current price is relative to the forecasts, yeah, and so this is an example of the euro British pound where You have the forecast. In fact, what I'll do is I'll just go back to the euro pound and we saw a for example of forecast on the Euro pound right here for the first quarter we had a And an exchange rate forecast of zero point eight nine in the second quarter We still have, you know, zero point eight nine and it looks like it's going maybe, you know About a hundred pips higher, right? So we have at least two quarters where we should be at the zero point eight nine's at some point. So then On a price chart what you want to do is look at where you are relative to the To the forecast at the time, right? So if you're at zero point eight nine Yeah, at the time of taking the trade, which is right here Yeah, then then you know that you probably don't want to you know, take that trade anywhere around there But let's say for example, you're around the zero point eight sevens Then you know that you've got at least a few hundred pips to two and a half to two hundred fifty pips You know to the upside Yeah, if prices come down right because ultimately this is seen as the potential for a bargain If this is seen as the forecast of where prices may be Yeah, so you want to look at where you are. Yeah in relation to the current Forecasts as well as the upcoming forecasts. Yeah, and so that is really kind of a bit of a shortcut way To understand, you know, whether you're gonna be on the right side of the market or not. Yeah But again, not, you know, you must say again, but please note That not all bank forecasts, you know are going to be up to date or relevant And so it's still important that you understand current fundamental and risk sentiment analysis because data changes and risk events Do occur, right? So there are surprises in the market with data. There are risk events, you know Who could have predicted COVID who could have predicted the Ukraine war? There are things that come out who could have predicted the Chinese balloon, right and whether that has an effect on on Prices and the US dollar at the moment doesn't look like it is but You have to have your finger on the pulse. Don't just blindly follow forecasts, of course It's a nice guide. It's an aid. It's some confluence But if you don't understand the reasons why then, you know, you might get caught out because if something Changes in the market and you're going on Maybe the forecast from you know from last week Then you're probably gonna get caught up because you're not aware of the changes the data needs to still support that narrative and so When swing trading what you want to do is look at the daily really as your as your overall You know to look where you are and you're doing your overall analysis and then Swing trading doesn't mean that you you know You can't go down into the lower time frames and look for an entry whether it's the one hour Whether it's the four hour if you have custom time frame charge you can go to six to the eight to the ten Etc and look for your your entries or if you just want to trade You know at the end of the day because you have a busy day with family work, etc Then that's fine, too Yeah, the entry doesn't really matter only really matters in terms of you know your potential Risk reward right and your upside potential but ultimately if you've got good to 300 pips To the upside and maybe you're only risking 50 60 70 pips Then you know that's still good risk reward and so profit targets You know to be based on Eva the bank forecasts coming You know true and correct and then being correct or just simply good risk reward, right? You might want to take it off takes a profit off just before you get to You know the bank forecasts Right if you're up a certain amount try your stops. However, you manage the trade or choose to manage the trade and so You know swing trading Forex successfully with fundamental resentment analysis, you know The reason why you use fundamental analysis is to recognize when you know exchange rates really are cheap Yeah, and to get in you can get in at the beginning of a potential trend and also obviously looking at where the banks are forecasting where price is and Your directional bias, which is you know first and foremost what you really want to understand what your directional bias should be and Also as well fundamentals gives you understanding, you know deep fundamentals not just forecast but understanding the deep fundamentals Gives you the confidence to hold trades for longer and you're less likely to take profits early, right? What's the point in taking profits? If you know that the fundamentals are in your favor and is likely to move You know, maybe a thousand pips in your direction at some point, right? You know, you don't want to look at your account and say what I'm up a two to one And then I wanted to just want to take you know profit That doesn't make any sense when you know What you want to do is ride the wave and ride the coattails of the of the banks And it's very hard to do that without Understanding the fundamentals if you're just trading price and hoping and praying again You're pretty much in the wilderness price is not going to tell you where where you know forecast where prices go and indicators might be right But they're only right simply because the banks You know the banks are saying that you know prices will go in that direction and as a result The indicators are looking at price and if then prices go in higher Excellent the indicator looks like it's working But ultimately those people who are technical traders don't understand the fact it wasn't indicated that was right It was the fact that they were you know inadvertently on unknowingly On the side with the with the banks, right because the banks create the market and they are the ones that are Going to move price in you know the direction Whether it's going to trend or whether it's going to range or what is known as a fair value auction And so also recognize, you know, it's important to recognize when using fundamentals and fundamentals can help you recognize when price is likely to be a Reversal or or just a pullback right so again data changes And so you might get in on a trend not knowing that fundamentally in fact There's been a total 180 in monetary policy and now it's become a You know the the market is moving against you so for example You could be on a you know see a really nice trend and then you could be thinking to so far I'm going to get in on this this this area here. This is a nicer demand zone But not knowing that in fact at this point in time. Yeah, maybe the European central bank the ECB have surprised the market Yeah, and said oh well, you know, we're we're gonna start cutting rates instead of hiking rates, right? And then you're thinking to yourself what the trend is still up the trend is still up, right? And I'm gonna buy here when you should really understand that there's no technical level in the world That's gonna work against fundamentals none. Absolutely. You might get a small little bounce But ultimately this is now turning into you can have confidence if you understand the fundamentals This is gonna turn into a total reversal rather than just looking at pullbacks And this is how traders get caught at levels, you know day in day out week in week out because they don't understand The the fundamentals side of things in the risk sentiment side of things as well And so Also as well the number of trades you take does not equate to that amount of profit You'll make swing trading should never be looked at as a bad thing just because you take maybe, you know Four or five trades a month doesn't mean you're gonna make any less money than someone who takes for 40 or 50 trades a month, right? It doesn't really matter because somebody can take, you know 100 trades that month and break even or even lose you could take, you know One or two trades that month and have and both of those trades could be winning trades So the number of trades you take does not equate to the amount of profit you'll make so don't think that swing trading is Any less profitable than something like day trading and if you want fundamental analysis mentoring and a lot more Visit trading 180 comm hope this helps and love to hear your feedback on it. Take care guys and speak soon