With the concept of Forex, we have already seen. Now it is the turn to learn the basics of fundamental analysis. So,
fundamental analysis - is the trend forecasting (movement) courses of
world currencies and other financial instruments based on the analysis
of macroeconomic data. In simple words - is the study of the political and economic situation
of those countries, which currencies you are interested in.
Fundamental analysis examines various financial news the world's political and economic state of individual countries and all countries combined, which may affect the currency rates fluctuations. A key task of fundamental analysis is to investigate the influence of numerous factors on the future exchange rate.
Information for this may be the following data:
- data on the stock exchanges and major commercial banks;
- Indicators of economic growth (eg GDP, industrial production, inflation dynamics);
- interest rates of national banks;
- economic policy of the government;
- probable changes in the political life of the state;
- various rumors and expectations about the economy;
- natural disasters;
All of the above data is called by experts "fundamentals" of which every trader can find out the latest news and economic statistics. To be honest, fundamental analysis - one of the most difficult types of analysis needed to predict price movements on Forex. And it is difficult because the same data in different conditions have different effects on the state of the currency market. In addition, this type of analysis requires processing of very large amounts of information, which is not all traders can do. That is why technical analysis is more popular among the active participants of exchange trade.
A trader should analyze the 4 types of fundamental factors:
- economic;
- policy;
- rumors and expectations;
- force majeure situation;The impact of fundamental factors in Forex is very high, but the extent of this influence on the change in foreign exchange quotations provide virtually impossible. Therefore, it is desirable to use fundamental analysis along with technical analysis, you have to open a bargain only after the parallel analysis in two ways.The purpose of fundamental and technical analysis, one - to predict the movement of quotations of world currencies. The only difference is that the fundamental analyst looks at Forex by economic factors rather than by the currency market itself, as it does technical analyst (trader), regularly examining quotes graphics.
Fundamental analysis allows to identify both long-term and short-term changes in prices. Here is an example: the first option - comes news of rising inflation in the country. Inflation - is the depreciation of the national currency. Usually, when there is such news, the national currency will fall within one or more hours. The second option - if you take into account all macroeconomic factors together, analyze them and come to the conclusion that they are negative for the national economy, we can confidently make a prediction about what the long-term national currency exchange rate will also decline rapidly.
Fundamental analysis examines various financial news the world's political and economic state of individual countries and all countries combined, which may affect the currency rates fluctuations. A key task of fundamental analysis is to investigate the influence of numerous factors on the future exchange rate.
Information for this may be the following data:
- data on the stock exchanges and major commercial banks;
- Indicators of economic growth (eg GDP, industrial production, inflation dynamics);
- interest rates of national banks;
- economic policy of the government;
- probable changes in the political life of the state;
- various rumors and expectations about the economy;
- natural disasters;
All of the above data is called by experts "fundamentals" of which every trader can find out the latest news and economic statistics. To be honest, fundamental analysis - one of the most difficult types of analysis needed to predict price movements on Forex. And it is difficult because the same data in different conditions have different effects on the state of the currency market. In addition, this type of analysis requires processing of very large amounts of information, which is not all traders can do. That is why technical analysis is more popular among the active participants of exchange trade.
A trader should analyze the 4 types of fundamental factors:
- economic;
- policy;
- rumors and expectations;
- force majeure situation;The impact of fundamental factors in Forex is very high, but the extent of this influence on the change in foreign exchange quotations provide virtually impossible. Therefore, it is desirable to use fundamental analysis along with technical analysis, you have to open a bargain only after the parallel analysis in two ways.The purpose of fundamental and technical analysis, one - to predict the movement of quotations of world currencies. The only difference is that the fundamental analyst looks at Forex by economic factors rather than by the currency market itself, as it does technical analyst (trader), regularly examining quotes graphics.
Fundamental analysis allows to identify both long-term and short-term changes in prices. Here is an example: the first option - comes news of rising inflation in the country. Inflation - is the depreciation of the national currency. Usually, when there is such news, the national currency will fall within one or more hours. The second option - if you take into account all macroeconomic factors together, analyze them and come to the conclusion that they are negative for the national economy, we can confidently make a prediction about what the long-term national currency exchange rate will also decline rapidly.
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