While you can use technical analysis to trade solely, it does help to have an idea of what’s going on fundamentally when it comes to various financial markets. This is just as true in the energy markets as it is anywhere else. After all, one of the biggest drivers of price is supply and demand, and there are a multitude of reasons why the market will swing back and forth from either oversupplied, or very demand driven. If there is a disruption in supply, typically this will come across newswires. For example, conflict in the Middle East has an effect on crude oil pricing due to the fact that we could see supply disruptions. One such example would be the wars that recently happened in Iraq. This obviously had an unsettling effect on crude oil markets, as people were concerned whether or not there would be enough crude oil to handle supply while Iraqi oilfields were obviously off-line. There are other things such as politics that can get involved as well, but typically we are looking at data when we speak of fundamentals. The US Energy Information Administration has a website at www.EIA.gov that lists several different data sets to give you an idea as to where supply and demand will be when it comes to crude oil and natural gas. For example, you can read about reserves and inventories in the United States, which of course is very important considering that the United States is one of the largest consumers of petroleum in the world. Also, you get other such announcements such as Gulf of Mexico Offshore Production. In other words, this gives us an idea as to what the supply situation will be. Obviously, the more supply, the lower the price in the markets typically.

Fundamentals for stocks in indices very drastically, but there are a handful of common themes that you will see. For example, stocks have some very basic fundamentals, such as earnings estimates and of course actual earnings. After all, the stock valuation and pricing is a reflection of how a company is performing. The higher the profits and earnings, the higher the stock price typically. However, there are some other things that can come and play, such as the ability to sell debt, or perhaps something along the lines of a CEO change at the company and whether or not the market is confident with the new leadership. Fundamentals in indices are a little bit more varied, but there are a handful of them that people typically pay attention to. One such fundamental to a countries index is GDP. Gross domestic product is the value of an entire economy for lack of a better term. Obviously, the better the GDP is growing, the better that the stock market should as well. You also have other things such as interest rates they come into play. Or more specifically, interest-rate expectations. The central bank is looking to raise interest rates, typically it works against the value of a stock market. Also, exports can greatly influence an index, especially in certain countries such as Japan. The Japanese after all have an export driven economy, so the more exporting they do, the better off the Nikkei 225 should be. On top of that, currency can also come into play for export economies as a strong currency can often shrink the ability to sell worldwide. Regardless, you have to keep in mind that most of which are looking at is the state of either the financial balance sheet of a company, or the overall economy of a nation. As a general rule, the higher things go numerically, the higher the index will.

In this video, I look at calendars and their importance. After all, the economic calendar is very important to pay attention to as various headlines can move currency, commodity, and various other financial markets. There are several calendars out there for use, and in this example I’m using the calendar at Forex Factory, as it is a neutral and free one that anybody can access. When you look at the calendar, there is quite often some type of gauge when it comes to impact. Typically, the events will be color-coded, and as a result it makes it simple to figure out what could move the markets during the day. Because of this, it makes it easy to see what’s more important than others, and more important for specific countries or markets. For example, you don’t want to place money on a currency that is about to get a massive headline coming in a few minutes. At that point, you are simply gambling. When you walk into your trading area, you have to check the calendars in order to figure out what’s coming up for the day, and potential unpleasant surprises that could arise. The last thing you want to do is place a trade right before some type of massive economic surprise that works against you. With this, you can avoid the absolute worst thing that happens to traders: putting a position on and having the market turnaround against you based on some announcement that you could have looked up. After all, if you are not aware of potential market moving events, you’re at the mercy of unseen forces. Although I used Forex Factory in this example, keep in mind that most brokerages offer some type of event calendar.