Secrets to Fundamental Trading That Only Professional Traders Know

May 26, 2020
The secrets to fundamental trading are the key reasons why professional and proprietary traders have remained on top of the trading game. This post discusses the various fundamental investing secrets only known to professional traders.
Secrets to Fundamental Trading That Only Professional Traders Know

Forex market is known to be an investment spot for professional and proprietary traders who rely on their skills and expertise to trade currencies. For investors new in forex trading, there is no doubt that most of them will scour the internet for trading hints and tips.

But where is the catch? The trading success of professional traders lies in their choice of the right strategy of analysing and speculating financial markets. Notably, between technical and fundamental strategies of analysing the markets, fundamental analysis is quoted as the most profiting.

However, unknown to many, secrets to fundamental trading are the true explanation of why professional and proprietary traders have gained mileage in the trading business.

But what are the secrets to fundamental trading, and what impact do these secrets have on one’s trading experience? Read on for a highlight of fundamental trading secrets.

Introduction to Type of Traders

market sentiment

There are various categories of traders based on the types of trading strategies used. These types of traders include the following;

  • Fundamental Traders

These traders use stock trading fundamentals to determine which securities to buy and when to buy them. Fundamentals of stock trading include company-specific events, such as acquisitions, mergers, reorganisations, and stock splits.

On the other hand, forex fundamentals also include GDP, retail sales, consumer price index, and producer price index.

  • Technical Traders

These traders rely on trends captured by charts and graphs to initiate a trade.

  • Momentum Traders

Momentum traders buy and sell securities that are strongly moving in a particular direction. They speculate that the prices of these securities will continue to move in one direction until the trend declines in strength.

  • Swing Traders

These are traders who attempt to generate yields by holding security longer than a single day.

  • Scalp Traders

A scalp trader makes multiple trades in an attempt to generate profits from small price movements in each trade.

What are the 2 Types of Trade Analysis Used by Professionals?

fundamental analysis

While there are multiple types of strategies used by investors for trade, professional traders employ two major methods of analysis to assess the market. These methods include technical analysis and fundamental analysis.

As a trading secret, professional analysts use a mix of these two strategies to monitor trading fundamentals and technical indicators in a market.

What are the Secrets to Fundamental Trading?

It is very easy for the internet to hype novices into thinking that trading in stock and forex markets is a simple pursuit. But the truth is, trading in any financial market requires skills and expertise, something professionals and proprietary traders use to their advantage.

In addition to having trading skills on their fingertips, professional traders have secrets only known to them, which give them leverage in the industry.

This section discusses the specific secrets to fundamental trading that are only known to professional investors.

  1. Buy the Rumour, Sell the News

This maxim has become quite popular as a forex trading strategy. While this strategy sounds risky for risk-averse investors and beginners, professional traders have a deep connection to it.

But how is this maxim one of the secrets to fundamental trading?

The application of this tactic involves a scenario where traders open a trading position based on a rumour. The investor will then close the position upon the release of anticipated news.

Trading decisions made by investors are generally based on news announcements, such as economic reports by a central bank or a company declaration. However, speculation or expectations of an analyst have a way of triggering a movement in the price of a security prior to news pronouncements.

This is where the concept of ‘buy the rumour’ comes in. If a majority of traders initiate trade based on the rumour, the market prices tend to move up or down. At this point, professional investors will seek to make high returns from security when the news is being announced.

If the announcement goes against or exceeds the rumours, then traders are likely to make an even greater profit or loss.

  1. Trade with the Trends

Trading with the trends means speculating and making a trade based on historical price movements and trends. Ironically, fundamental traders use technical tools to monitor the historical trends of security, which makes this strategy one of the secrets to fundamental trading.

Ideally, the fundamentals trading of a market has a way of making the headlines even for the wrong reasons. This is why fundamental traders eliminate the necessity to analyse the news independently in making a trading decision.

Reading news releases in isolation would force you into thinking that an economy or stock market has been thrown into a pitfall. Looking at historical trends will give you the real picture of where the market will be in the long term.

Professional traders have this concept in their lists of trading strategies, which is why most of them continue to gain high returns by day.

  1. Markets are Interrelated

The global village concept has led to a dynamic interconnection of countries around the world in various aspects, including financial markets. Different global markets are more connected today than they were decades ago.

This means that what happens in the European market has effects on the Asian, American, and African markets. With this interconnection, professional fundamental analysts can speculate some profitable venture based on trends of another market.

  1. Creating a Trading Schedule

A stock or forex market is not a place where investors run to for instant returns. Professional traders are committed to regular trading every day for a long duration. These traders use a trading schedule that enables them to follow the news as they keep track of their investments.

One of the secrets to fundamental trading that distinguishes professional traders from novices is their unwavering commitment to their trading schedule.

Final Thoughts About Fundamental Trading

fundamental tradingContrary to the hype created online, fundamental trading in any securities market requires skills and expertise. Investing in these markets might not augur well for investors looking for instant and high yields.

Professional and proprietary traders are aware of this truth, with most of them leaning on a list of trading secrets to leveraging their investments. Some of the secrets used by fundamental professional traders might sound minor, but a sober application of these secrets has proven to be quite profitable.

Please share this information on your social media pages and encourage your friends to visit our website for more updates on forex trading and other related topics.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.

Categories: Education

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