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I suggest to start with one commodity. Choose one, that you like. Because you will spend a lot of time with this commoditiy. And choose one for which fundamental information is easily available for you. As you live in the US, corn could be a good choice. Or Natural Gas. Or Cattle.
Choose a broker that has a lot of knowledge and experience trading this commodity. He will send you relevant information, and he will answer your questions.
Read everything you can find about the commodity. Eg. corn: Where is it grown, when is it planted, when is pollination period, when is it harvested, which deseases exist etc. You find a lot of this information via Google.
Weather is relevant for all of the commodities mentioned above.
Currencies are important for some commodities, they are less important for others.
Have a look at the seasonal charts and at the COT data for the commodity.
Last but not least: Look for sources of S&D data. You can either take the original ones published from USDA etc. Or use data from your broker, Hightower etc. who compile this data and make it easier to work with it.
Now you have the basis information you need. (I assume you already have a good knowledge of the trading instruments.)
How can you set up a trade ? One example for this process: I try to find years with similar fundamentals than the actual year. And compare charts, seasonal charts, COT data. Often this yields a good estimate for the further development of the price.
Hope I could help. Please feel free to ask further questions.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
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Posts: 5,049 since Dec 2013
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One reason you find dozens of books on technical analysis but not fundamentals is that technicals are technicals and have been since they were discovered while fundamentals continually change. A new natural gas pipeline, or storage field can significantly change natural gas fundamentals (shale gas anybody?). A new copper mine, or oil field, changes supply fundamentals. New Tariiffs change demand fundamentals. Somebody upgrades a refinery and both supply and demand changes. So any (or at least most) fundamental books would get dated quickly.
A reason that trading financial futures using fundamentals is difficult, is because the physical traders, actually trading and moving the physical profit, get all the fundamental information well before you ever will. Couple of weeks ago they announced a crude outage in Canada. I don't remember the exact data but go back and look at what happened with CL the day before it was announced. Definitely looks like somebody knew the day before it was publicly announced. Same things happen with pipeline, powerplant and refinery outages. Somebody always knows first! @myrrdin mentioned weather several times. Well many of the bigger traders will have their own in-house meteorologists, meaning they will get their forecasts before you do, and that they will have more detailed and intricate forecasts than you can access. This doesn't mean you can't use fundamentals, you definitely can, it's just not as easy as just saying you are going to do it. Without the access to prompt physical information I would advise you focus more on longer term trends, much like @myrrdin does, rather than trying to trade prompt month futures.
Regarding books/information for energy the EIA is a massive source of information. Petroleum Refining in Non-Technical Language is a great book to understand how refineries work, but won't turn you into gasoline trader overnight. The Daily Livestock Report is an excellent detailed source of meats information. This used to be free but I gather it isn't anymore.
Thanks for the info. My interest in fundamentals is strictly long term. In my opinion, breaking news will leave you broke. And I hate crop report days because the prices will swing widely in both directions before showing the true effect of the new estimates. But I have seen a couple traders who claim they are fundamental traders do very well with consistency. I want that.
I also want to see if fundamental analysis will help me get back in to the ag sector. Right now I service mainly grain producing farmer/speculators. I here so many different strategies for these markets I can't get a clear direction in my head for my personal trading. I'm less emotional when I'm not in these markets and think I can provide better advice for my customers. Right now I provide recommendations based on TA and the growers price goals. I relay fundamental news after the fact in an effort to explain price moves after the fact.
I am familiar with the information sources you mentioned. I guess I'm looking for some direction for how to use them in addition to Schwagers regression analysis. Basically I'm looking for technical analysis methods for fundamental data.
I fully agree that as a retail trader the only way is to trade longterm.
I like the days after USDA / WASDE reports. Having studied the report and seeing the end of day chart of the day of the report often opens the eyes for the price development in the next couple of weeks. One way I trade this is to sell options (approx. 100 DTE; calls or puts, depending on my opinion) after the report with a strike price at the level of the price just before the report. Often volatility is still ok on the day after the report.
