How to Structure the Process from Research to Online Trade Execution

One way to capture the price movements of Forex pairs and other financial instruments is to rely on fundamental analysis to understand the narrative driving the market and open positions in the direction of the prevailing trend or fundamental bias.  

News trading and other strategies use fundamental analysis as a key pillar, and many retail traders implement it to understand why markets move and explore new opportunities.  

In this article, we discuss the three main steps for trading based on fundamentals using an online trading platform, including conducting research, building a trading thesis, and executing positions.  

Step 1: Research Markets to Identify Impactful Events 

The main goal of fundamental analysis is to interpret economic data, and there are two types of events to consider: scheduled and unscheduled ones.  

Much of the analysis process involves monitoring scheduled events on an economic calendar – one of the most important tools for a fundamental trader.  

Among the most important macroeconomic factors to watch are interest rates, followed by economic releases that can influence central bank decisions, such as GDP, inflation, employment, and trade balance reports.  

Interest rate decisions by the US Fed, the European Central Bank (ECB), the Bank of England (BoE), and the Bank of Japan (BoJ) are in the spotlight because they can affect the most important currencies, including the USD, EUR, GBP, and JPY, respectively.  

When a central bank expresses its readiness to raise the interest rate in an attempt to contain inflation, traders may turn more bullish, as higher rates mean savings become more attractive. Meanwhile, any signals of rate cuts, which are meant to spur economic growth, can put pressure on the national currency.  

Besides the interest rate decision itself, which remains a key component of a bank’s monetary policy and can be updated eight times per year, traders monitor policy statements, meeting minutes, press conferences, and speeches by central bank officials.  

The idea is that markets usually price in expectations before rate changes actually take effect. The same is true of economic indicators influencing monetary policy, including: 

• GDP: The gross domestic product represents the total value of all final goods and services produced within a country, and the gauge is typically released on a quarterly basis. The national currency becomes bullish when the GDP figure exceeds expectations.  

• Inflation (CPI): Given that higher-than-expected inflation can increase pressure on a central bank to raise interest rates, traders watch it closely. 

• Employment (Nonfarm Payrolls): The job market reflects the health of an economy. In the US, the Nonfarm Payrolls report, released on the first Friday of each month, is one of the most impactful events for the USD.  

Besides these scheduled events, keep an eye on unexpected economic and geopolitical events.  

Step 2: Turn Your Research Into a Defined Trading Plan 

The next step is to convert your research findings into an actual strategy by defining the trading thesis.  

You can start by comparing analyst expectations with potential outcomes. For example, if interest rates are expected to hold but the central bank decides to raise them, then you should prepare for a bullish narrative for the corresponding currency.  

In this way, you can develop different scenarios, as shown below: 

Determine which currency pairs reflect your thesis. For example, if you expected meaningful changes from the Fed, you’d trade USD pairs, including EUR/USD and GBP/USD.  

This step also implies developing and polishing a strategy that defines the best entry and exit levels, and this is where you’ll need technical analysis. It doesn’t have to be complicated, and the main goal is to identify key support and resistance levels.  

The strategy should also define key risk management priorities, which involve position size, maximum expected drawdown, and stop-loss levels.  

Step 3: Execute the Trade and Respond to Market Repricing 

Once you find trading opportunities that align with your trading thesis and strategy, you can execute the trades. For this, you’ll need to register with a regulated broker and get access to a trading platform, such as MetaTrader 5.  

Forex and CFD brokers offer all major pairs and dozens of exotic pairs, although you should check the trading costs in the form of spreads and commissions.  

Depending on your strategy, you can use a market order for immediate execution or place a limit or stop order to enter when the price reaches your target level.  

While these are the three main steps of the trading process, they’re not chronologically separated. Research doesn’t stop once the order is placed, because the market keeps repricing. Bloomberg reports that the Fed’s first rate hike since 2023 lifted the Bloomberg Dollar Spot Index by 0.5%, and traders then priced in three further hikes through June after the chair’s press conference. A defined process sets entry, stop, and review points before execution and allows for repricing after an announcement. 

Fundamental analysis can provide context for why markets are moving, while a structured trading plan establishes how a trader will respond. Neither eliminates uncertainty. Forex and CFD trading involves substantial risk, particularly when leverage is used, and traders can lose some or all of the capital committed to a position. Past market reactions also do not guarantee that similar economic events will produce the same results in the future.