Fundamental analysis is the process of market analysis which is done regarding only "real" events and macroeconomic data which is related to the traded currencies. Fundamental analysis is used not only in Forex but can be a part of any financial planning or forecasting. Concepts that are part of Forex fundamental analysis: overnight interest rates, central banks meetings and decisions, any macroeconomic news, global industrial, economical, political and weather news. Fundamental analysis is the most natural way of making Forex market forecasts. In theory, it alone should work perfectly, but in practice it is often used in pair with technical analysis.
FUNDAMENTAL divided into 3 parts:
A. ECONOMIC INDICATORS ( Economic Indicators)
Economic Indicators is the analysis of economic data that is used to see if a viable currency for appreciation or even depreciated . Economic indicators are also used for the analysis of the nature of the analogical or data relating to the other data.
Economic indicators are usually the effect is not too long on the market , this is because economic indicators illustrate the economic conditions that occur at this time . Even the main indicators (leading economic indicators) only affects the market no more than one week as an example : NFP , Trade Balance , Jobless rate , interest rate etc. . And generally this news just came out in the early months of date of 1 s / d 10 . For economic indicators that there are a few things to note :
- Focus only on the news that High impact ( if at forexfactory.com red )
- Economic indicators are the comparison of data (data comparison) . The greater the differences that occur between the previous data with the actual movement of the data the greater .
- Each has a data standardization . For example :
Manufacturing PMI : U.S. = 50 ( because the U.S. is not industrialized countries )
UK or Eurozone = 60 ( country dependent economy to industry )
If the index number is above standard then occur Growth Industry ( Industrial Growth ) and if it is under the standard industrial degradation .
So even if , for example actualnya significant changes but conditions are still below standard then it will not bring positive results you . This is often trap .
- News status can go up and down according to economic conditions.
For instance : before the global crisis and jobless claims jobless rate is common news , but after the crisis the status of a high impact news due to the effects of the crisis led many companies to cap and increase unemployment .
- If there is economic data that came out simultaneously , this data can be mutually mengcounter
- WATCH THE MARKET REACTION WHEN outgoing data . The key is the market reaction .
B. ECONOMIC CYCLE ( Economic Cycle )
The economic cycle is divided into four stages , namely :
BOOMING --- > Slowdown ---- > CRISIS ----- > RECOVERY
NB : follow the clockwise
Economic cycles are decisive for the FUND MANAGER placing its investment portfolio at market instruments that affect CYCLE CYCLE OF MONEY ( MONEY CYCLE )
The economic cycle is fundamentally affecting the market for medium and long term , and is usually focused BOOMING conditions and CRISIS . CRISIS when all economic indicators had no effect on the market although newsnya GOOD FOR CURRENCY . For example : Global crisis that occurred in 2008, causing all the economic indicators are derived from the U.S. is not considered again and many are terminated .
C. ECONOMIC POLICY ( Economic Policy )
Economic policies are fundamentally affecting the development of the market for quite a long period . Usually these policies are taken to counter the economic conditions and maintain in the country concerned . If the measures taken are not going well then the economy will go down status and vice versa . Examples of Economic Policy : Intervention , bailout , QE , Money pegged , fiscal tightening and others. And this is the most dominant determining market direction Because FUND MANAGER ( Activator price ) focus more on ECONOMIC POLICY
So when these policies are taken the price will be very volatile, and this affects Strategist at FUND MANAGER puts heavy investment .
Conclusion :
- GOOD NEWS context to understand it and TRUE ! ! !
- Affect macroeconomic macroeconomic not vice versa.
ECONOMIC POLICIES ---- > ECONOMIC CYCLE ---- > ECONOMIC INDICATORS
- FOCUS was the one with the BIG PICTURE OF ECONOMIC POLICY ( THE BIG PICTURE ) from MARKET .
This paper is made so that we do not and avoid misguided understanding about FUNDAMENTAL NARROW so we do not often blamed as the source of our failure FUNDAMENTAL in trading .
It turns out that we who do not understand the FUNDAMENTAL RIGHT . HAPPY TRADING :)
Read More »
