Many new traders believe that fundamentals don’t affect short-term trades, thinking that fundamentals only matter for long-term investors while intraday or swing traders should focus purely on technical analysis. While technical patterns certainly play a major role in short-term trading, fundamentals can and do have powerful, immediate effects even over minutes or hours.

Let’s explore why fundamentals are just as important for short-term traders — and why ignoring them can be costly.

What Are Fundamentals in Trading?

Fundamentals refer to real-world economic factors and news events that influence asset prices. They include:

• Economic data releases: Inflation reports, GDP figures, employment numbers.
• Central bank decisions: Interest rate changes, policy statements.
• Political events: Elections, trade agreements, geopolitical tensions.
• Corporate news: Earnings reports, mergers, regulatory announcements.

While fundamentals often shape long-term trends, they also cause sharp, short-term price moves that technical setups alone cannot predict.

How Fundamentals Impact Short-Term Trades

Short-term traders must always be aware of fundamentals because:

• Economic news causes volatility: Major data releases like Non-Farm Payrolls or CPI can trigger huge, rapid price swings within seconds.
• Surprises move markets fast: When actual data differs sharply from expectations, markets react violently.
• Central bank comments shift sentiment: A single unexpected comment can flip market direction instantly.
• Risk sentiment changes: Geopolitical headlines can create sudden risk-on or risk-off moves across multiple asset classes.

Ignoring these events risks being caught on the wrong side of massive, sudden moves that no technical indicator could have foreseen.

Examples of Fundamentals Moving Short-Term Markets

Recent examples show how quickly fundamentals can affect markets:

• US CPI Reports (2022–2023): Inflation readings consistently caused large moves in the US dollar, gold, and stock indices within minutes of release.
• Federal Reserve Announcements: Rate hike or pause decisions led to sharp, intraday trend reversals across currency and equity markets.
• Geopolitical News: Headlines about wars, peace deals, or trade tariffs have sparked massive short-term rallies or sell-offs.

Traders prepared for these events — and positioned correctly — were able to capture major opportunities.

How Smart Short-Term Traders Use Fundamentals

Rather than ignoring fundamentals, professional short-term traders:

• Monitor economic calendars: Know when key releases and speeches are scheduled.
• Adjust strategies: Use wider stops and smaller positions around high-volatility events.
• Trade news reactions: Capitalise on sharp moves following surprises.
• Stay nimble: Quickly adapt when fundamentals change sentiment.

Incorporating fundamentals into short-term trading strategies gives traders a fuller picture of potential risks and opportunities.

Conclusion: Fundamentals Matter Even for Short-Term Trades

In conclusion, fundamentals do affect short-term trades. Economic news, central bank decisions, and political developments often move markets sharply, creating both risks and opportunities for short-term traders. While technical analysis remains crucial for timing, fundamentals provide the context that can dramatically alter short-term price action. Ignoring fundamentals is not a professional strategy — it is a dangerous blind spot.

If you want to build the skills to trade short-term markets with a complete understanding of both fundamentals and technicals, explore our Trading Courses and take your trading strategies to the next level.