Fundamental analysis as a trading method in forex market
The financial success of a Forex trader depends on many aspects, among them is the ability to adequately and comprehensively see the situation in the financial market. There are few main types of analysis of the financial markets. In this article we will discuss one of them – fundamental analysis. It represents a deep study of the political and financial situation in the countries whose national currencies are traded in most of the Forex platforms.
It is not a secret that the financial situation of every country has a big impact on the financial sector of a country and as a result forms the rates of the national currency. Traders who trade according to the fundamental analysis must always be aware of political situation of the world major countries. There are few leading world’s news agencies that can provide you with all needed information: “Bloomberg”, “Reuters”, “France Press”, etc. After getting familiar the economical or political situation in the certain countries, a trader concludes whether there is a potential for a national currency to go up or down. Basing on his conclusion, a trader makes a trading decision for buy or sell. This is how the fundamental analysis works.
We would like to draw your attention on the type of the information available for fundamental analysis. It can be divided into two groups: predictable and unpredictable. The first group includes the data that is announced in a certain time and a trader has an idea about them. Moreover such data has a partly novelty effect, because traders already have got familiar with the experts’ predictions about them. Usually this kind of data is about the macroeconomical situation of development of a particular country or the whole region. The most common data of this type is the inflation rates, indicators or economic activity and unemployment, budget deficits, interest rates, etc.
As for the unpredictable factors, so they usually are the all kind of suprising events mainly in the political sphere. For example the unplanned resignations in the government – the President, Minister of Economy and Finance, Central Bank chairman, etc. Among the unexpected factors in fundamental analysis can also be natural disaster, military conflicts, terrorist attacks, etc. These events are the real force majeure, whose influence on the Forex market may be quite noticeable. Traders simply need to take them into account when trading Forex online.
In the beginning traders may ask a question how they can be updated with all the events of a country or the whole world. The reply is very simple. Today most of the Forex trading platforms provide their traders the most updated world news and economic calendars that are important for fundamental analysis. Therefore traders don’t have to spend time on searching for information. The most important thing in the fundamental analysis is to know how to find the signs for the potential situation in the Forex market.
Article Source: Messaggiamo.Com
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