Fundamental Analysis Courses

By Tok BooM Marking aka Ahmad

Firdaus

Assalamualaikum
Kita mulakan Kelas dengan bacaan
Al-fatihah
Kelas saya bersifat perkongsian
diharap dapat dimanfaat oleh semua
peringkat trader.

Bank Trader

Philosophy of Trader
Sentiment

War crisis
Geopolitics/Disas
ter

Fundament
als

Technical

Economy Data
Inflation
data/GDP
Major Trends

Point of Entry
Exit plan

What is a main point before u need to

understand Fundamental Analysis?
How to study economy data?
What is the major instrument of
Investment?
What the most important about COT report
What function inflation to our economy
system?
How to related 4 element before we trade
currency?
What is QE?

How to study economy data?

Economy Indicator
Basic source forex factory and Daily
fx

Previous Data Change

How to read Economy

Indicator?

How to read Economy Indicator?

/other source
Henry Liu website/ Deviation point

Type of Economy Indicator

Forexfactory Analysis

Risk News Category

NFP
Executive Summary : source PARIBAS
>200K : Long USD/ZAR, Short AUD/USD
170 to 181 : short AUD/CAD
130k to 160k : Long NZD/USD Long EUR/USD,
100k to 125k : Long AUD/USD
lower than 90k : Short CAD/JPY.
70k Deviation

Comparison M/M, Y/Y, q/q

http://www.tradingeconomics.com/united-states/unemployment-rate

What is the major instrument of Investment?

Stocks Market
What is the stocks market mean?

Also known as the equity market, the stock market is one of the most vital
components of a free-market economy, as it provides companies with
access to capital in exchange for giving investors a slice of ownership in
the company.

List of Stock Market

Company listed on NASDAQ

Major Stock Market

Nikkei
Index

Japan
Stoxx
50

Europe
NASDA
Q

US

DJIA

FTSE
100
S&P50
0

Global Foreign Stocks

Source: Finviz.com

Currency

A generally accepted form of money, including coins and paper notes,

which is issued by a government and circulated within an economy.

Used as a medium of exchange for goods and services, currency is the

basis for trade.

What Major issue would create up

and down for 8 currency?
USD

EUR

CHF

GBP

Residential Mortgage

Dollar Us strong

Stable Currency

MPC Rate

Interest Rate

Europe country

France, Italy and

Germany

Services PMI

Unemployment Rate

Economic Crisis

EU member

Construction PMI

War Crisis

ZEW Economic

Gold Trending

Manufacturing PMI
Business Friendly

What Major issue would create up

and down for 8 currency?
JPY

CAD

No 1 Product
Exporter

Offshore Industry

Inflation rate

Sensitive on oil price

No 1 importer oil

Oil producer (No. 9)

Nikkei Index
Us growth

AUD
Sensitive on gold
price
Gold Producer (No 2)

NZD
Follow Australian
Currency
Biggest Milk Producer
Gold Producer

Major Currency and Pairing

Pair
USDJPY
EURUSD
GBPUSD
USDCHF
USDCAD
NZDUSD
AUDUSD
GBPJPY
XXAUSD

Person Behind Central Bank

Federal Open Market Committee(FOMC)
JANET YELLEN

EUROPEAN CENTRAL BANK (ECB)

MARIO DRAGHI

BANK OF JAPAN (BOJ)

HARUHIKO KURADO
BANK OF ENGLAND (BOE)
MARK CARNEY

Person Behind Central

Bank(Cont)
RESERVE BANK OF CANADA (RBC)
GORD NIXON

RESERVE BANK OF NEW ZEALAND (RBNZ)

Graeme Wheeler

RESERVE BANK OF AUSTRALIA (RBA)

Glenn Stevens
SWISS NATIONAL BANK (SNB)
Thomas Jordan

Type of Market participants

Commercial companies
Central Banks
Foreign exchanges
fixing
Hedge Funds as
speculators
Investment
management firm
Non-bank foreign
exchange
Money Changer

Size of Market
As such, it has been referred to as the market closest to the ideal of perfect
competition, notwithstanding currency intervention by central banks.
According to the Bank for International Settlements, as of April 2010,
average daily turnover in global foreign exchange markets is estimated at
$3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily
volume as of April 2007. Some firms specializing on foreign exchange
market had put the average daily turnover in excess of US$4 trillion.

The $3.98 trillion break-down is as follows:

$1.490 trillion in spot transactions
$475 billion in outright forwards
$1.765 trillion in foreign exchange swaps
$43 billion currency swaps
$207 billion in options and other products

Best-paid Hedge Fund(2007)

Hedge Fund

The HF Myth

Commodities

Ineconomics, acommodityis a marketable item produced to

satisfywantsorneeds.Economic commodities
comprisegoodsandservices.

Type of commodities

Why Commodities?
It balance the economy.

Bonds

Bonds are a form of debt. Bonds are loans, or IOUs, but you serve
as the bank. You loan your money to a company, a city, the
government and they promise to pay you back in full, with
regular interest payments. A city may sell bonds to raise money to
build a bridge, while the federal government issues bonds to
finance its spiraling debts.

Maturity and Yield

More Bonds create higher Interest

Rate

Bonds Buying Program

What the most important about COT report?

For each commodity, the COT reports provide information on the size
and the direction of the positions taken, across all maturities, by
three categories of futures traders. These three trader categories are
called commercials", "non-commercials, and non-reportable.
Commercial traders are those who use futures or option contracts in a
given commodity for hedging purposes, as defined in CFTC regulations.
Commercial traders hold positions in both the underlying commodity and
in the futures (or options) contracts on that commodity.
By contrast, non-commercial traders do not own the underlying asset
or its financial equivalent; they hold only positions in futures (or options)
contracts.
Finally, non-reportable positions are those held by traders who do not
meet the reporting thresholds set by the CFTC (usually small traders).

3 Type of Trader

Hedge
Bank
Fund
Retail
Trader

COT ( Commitment of
Traders)

http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm

COT

Even if you are a day trader of longer time investment, as swing trader, you need to
know how COT reports are. Therefore you should check these reports, before you
enter short or long trade. If COT reports "show" many short traders are in the market,
you should reconsider your entry, if you wanna go long. Even if you, based on your
technical analysis want otherwise. These reports tell us if buyers are in control of the
market, base on there positions, or sellers. You dont wanna bet against the market.
You should be "friend with the trend":
How to ready COT, by following the next steps:
1. Go to "Market Reports" on the menu.
2. Select "This month in Futures Markets"
3. Scroll down until "Financials"
4. On the right side you have the text (reports) and on the left side a chart and the
numbers/contracts (in thousands).

October COT Report

Commercial(B
ank)

Non
Commercial
(Hedge Fund)

NonReportable
(Retail
Trader)

Long position
Buy (+16.4%)

Long position
Buy (-25.4%)

Long position
Buy (-5.6%)

Short position
Sell (+7.0%)

Short position
Sell (-5.7%)

Short position
Sell (+9.4%)

What function inflation to our economy system?

The rate at which the general level of prices for goods and
services is rising, and, subsequently, purchasing power is
falling.
Benchmark 2.0%

Higher salary,
with tax, low
prices for goods
and services.
Lower salary,
Without tax,
high prices for
goods and
services.

2.0%

Inflation Data Q/Q

4
3.5
3
2.5
2
1.5
1
0.5
0

2014-Oct
2014-Jul
2014-Apr

2014-Apr
2014-Jul
2014-Oct

How to related 4 element before we trade currency?

HIGHER INTEREST RATE = HIGHER

ECONOMY DATA = HIGHER
INFLATION = HIGHER CURRENCY
VALUE :: OR LOWER INTEREST RATE
= LOWER ECONOMY DATA LOWER
INFLATION = LOWER CURRENCY
VALUE ::

Core idea of Fundamental

Inflatio
n Rate

Interest
Rate

Idea of
fundamen
tal

Econo
my
Data

Currenc
y Value

Cycle Economy
Cycle Economy
Inflation and GDP performance
1. Inflation review(slow growth)
2. Data economy review 'bad data
3. Currency Value review 'higher and lower
4. Interest Rate review 'cut rate
5. Interest zero -QE review
6. Data economy review 'good data
7. Currency Value review 'higher and lower
8. Interest Rate review' increase rate
9. GDP review 'performance index(fast economy
growth)..

http://www.tradingeconomics.com/

Latest performance Index

Jan 2014

Cont (August 2014)

Quantitative easing(QE)
Quantitative easing is distinguished from standard central bankingmonetary policies,
which are usually enacted by buying or sellinggovernment bondson theopen marketto
reach a desired target for theinterbank interest rate. However, if a recession or depression
continues even when a central bank has lowered interest rates to nearly zero, the central
bankcan no longer lower interest rates. The central bank may then implement a set of
tactics known as quantitative easing. This policy is often considered a last resort to
stimulate the economy.[
A central bank enacts quantitative easing by purchasingwithout reference to the interest
ratea setquantityof bonds or other financial assets on financial markets from private
financial institutions.]The goal of this policy is to increase themoney supply rather than to
decrease the interest rate, which cannot be decreased further.However, if the central bank
also purchases financial instruments that are riskier than government bonds, it can also
lower the yield of those assets.
Quantitative easing can be used to help ensure that inflation does not fall below
target,]Risks include the policy being more effective than intended in acting
againstdeflation(leading to higher inflation in the longer term, due to increased money
supply),or not being effective enough if banks do notlendout the additional
reserves.According to the International Monetary Fund and various economists,
quantitative easing undertaken since the globalfinancial crisis of 200708has mitigated
some of the adverse effects of the crisis.Financial experts have criticized the programs for
exacerbating wealth inequality, a finding confirmed by the Bank of England.

Flowchart QE

Why we need QE

US QE1, QE2, and QE3

US QE1, QE2, and QE3

Federal Reserve Holdings of Treasury Notes (blue) and Mortgage-Backed Securities (red)
The USFederal Reserveheld between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late
November 2008, the Federal Reserve started buying $600 billion inmortgage-backed securities. By March 2009, it held $1.75 trillion of
bank debt, mortgage-backed securities, and Treasury notes; this amount reached a peak of $2.1 trillion in June 2010. Further purchases
were halted as the economy started to improve, but resumed in August 2010 when the Fed decided the economy was not growing
robustly. After the halt in June, holdings started falling naturally as debt matured and were projected to fall to $1.7 trillion by 2012. The
Fed's revised goal became to keep holdings at $2.054 trillion. To maintain that level, the Fed bought $30 billion in two- to ten-year
Treasury notes every month.

In November 2010, the Fed announced a second round of quantitative easing, buying $600 billion ofTreasury securitiesby the end of
the second quarter of 2011.The expression "QE2" became ubiquitousnickname in 2010, used to refer to this second round of
quantitative easing by US central banks. [Retrospectively, the round of quantitative easing preceding QE2 was called "QE1". [
A third round of quantitative easing, "QE3", was announced on 13 September 2012. In an 111 vote, the Federal Reserve decided to
launch a new $40 billion per month, open-ended bond purchasing program of agency mortgage-backed securities. Additionally,
theFederal Open Market Committee (FOMC) announced that it would likely maintain thefederal funds rate near zero "at least through
2015."[According to NASDAQ.com, this is effectively a stimulus program that allows the Federal Reserve to relieve $40 billion per month
of commercial housing market debt risk.[Because of its open-ended nature, QE3 has earned the popular nickname of "QE-Infinity." [On 12
December 2012, the FOMC announced an increase in the amount of open-ended purchases from $40 billion to $85 billion per month.

On 19 June 2013,Ben Bernankeannounced a "tapering" of some of the Fed's QE policies contingent upon continued positive economic
data. Specifically, he said that the Fed could scale back its bond purchases from $85 billion to $65 billion a month during the upcoming
September 2013 policy meeting.[He also suggested that the bond-buying program could wrap up by mid-2014.While Bernanke did not
announce an interest rate hike, he suggested that if inflation followed a 2% target rate and unemployment decreased to 6.5%, the Fed
would likely start raising rates. The stock markets dropped by approximately 4.3% over the three trading days following Bernanke's
announcement, with the Dow Jones dropping 659 points between 19 and 24 June, closing at 14,660 at the end of the day on 24 June. On
18 September 2013, the Fed decided to hold off on scaling back its bond-buying program.

Other aspect to know as fundi

trader

Source of news
Need to study report bank wisely
What function of stock market
Which one is Candle Bank
Currency Strength meter just a dollar
guide
War sentiment, geopolitics and
disaster.

Source of news
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.

http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm
http://www.forexfactory.com/index.php
http://graphics.thomsonreuters.com/Buzz/FX_Positioning.html
http://www.fxstreet.com/economic-calendar/
http://www.dailyfx.com/calendar
http://www.babypips.com/
http://mc24.ch/index.html
http://www.investing.com/economic-calendar/
http://www.ensignsoftware.com/downloads.php
http://www.bloomberg.com/
http://
www.cmegroup.com/market-data/volume-open-interest/exchange-volu
me.html
http://www.cnbc.com/id/100746255?region=world
http://www.timeanddate.com/time/dst/2013.html
http://www.bbc.com/
http://www.ukforex.co.uk/exchange-rate
http://www.futurecurrencyforecast.com/
http://www.eia.gov/
http://www.reuters.com/
http://www.forexlive.com/
http://asia.wsj.com/home-page
http://www.marketwatch.com/
http://www.chartpattern.com/understanding_chart_patterns.html

Website

Need to study report bank wisely

How to related Stocks Market to

Currency Index?
First, no high impact data on
economy indicator.(Example
10.9.2014)
Stock market move early 20minute

Source stock market: Bloomberg

Currency Strength meter just a dollar guide

Which one is Candle Bank

Follow minute meeting-FOMC,ECB,BOJ
Point to address
1. Interest rate
2. QE review
3. Interest Review
4. Currency Review
If no result..no decisionthat we call Bubble
Candle

Sample of Key Point

Sample of Key Point

So what to expect from the Thursday
ECB meeting?
1. Hold on rates
2. Details of ABS program
3. TLTROs comments
4. 'Full-blown QE' hints
5. Euro comments
6. Reform calls

ECB Cut Rate 4.9.2014

Scenario 1.
ECB just cut interest rate 0.15% to 0.05%

War sentiment, geopolitics and disaster.

If this War, geopolitics and disaster happen in London, Tokyo, Europe, and
other major pair currency country, so the currency will be effected.

Summary of
Fundamental Analysis