What is Fundamental Speed?
Fundamental Speed is the process of watching and noting the main (most important) economic indicators that affect the currency you are trading. Until the process of doing your entry level trading and your exit trading level in a systematic way.
In other words, when you enter and exit the market quickly in the moment of economic news releases you’ve previously calculated – usually referred to as a fundamental speed strategy – you can make changes to your own investments.
To better understand what is meant by fundamental speed, let’s look at the process of this fundamental speed strategy.
Just select high-impact economic news
First, you should start by choosing high-impact news / releases of economic data. Every day there are dozens of economic news releases globally but few – if any – are worth trading. Currencies tend to make large movements (fluctuate) when the release of economic data.
Here are some high-impact economic data and you should be aware of:
- Balance of trade
- Interest rate policy
- Retail sales
- Home sales
- Jobless Claims
Most online economic calendars show high-impact news in red, accompanied by a basic explanation of how the news moves the market. This can be a useful tool to decide which trading you are going to make.
Set a time limit for entry and exit from the market
The second step is you have to realize that the money you put into the forex market will not make a big impact (it will not move the market). Then you must have an exit strategy based on the system, not the emotions.
After economic data is released, reliable price movements occur for one to two minutes. Imagine only a maximum of two minutes. It depends on whether the release of the data is hawkish (higher than expected) or dovish (lower than expected). You’ll see that prices usually run in the expected direction – but they often seem to be random after the first 60 to 120 seconds.
There is not so much random movement as the government or authority is also trying to stabilize its currency or the bank wants its money to get the best transfer value – things that are out of your control. If the economic data is in line with the daily moving average, you can feel comfortable with the trade up to five minutes. However, this treatment is based on a trade-by-trade system.