Introduction of Fundamental Analysis

In this article, we will discuss the introduction of Fundamental Analysis.

What is fundamental analysis?

Fundamental analysis is a method used to evaluate and analyze the intrinsic value of a financial instrument, such as a currency pair in the Forex market. It involves examining various economic, financial, and geopolitical factors that can influence the value of a currency. By understanding these factors, traders and investors can make decisions about buying or selling currencies based on their analysis of the fundamental data.

Before going into a deep study, I have a question for you all, why should you need fundamental analysis? I hope there are several answers you have. Let’s look at why we care about fundamentals for Forex trading:

If you are purely dependent on only technical analysis and you have an open position now and then assume that the Fed decides to cut the rate or hike the rate all of a sudden. What will happen? Immediately the price can move 100-200 pips against you within a few minutes and you will stop out. Especially in today’s market environment, you will find that you will get stopped out very frequently even if you have a great technical strategy.

Various economic fundamentals drive the Forex markets in the long term and determine the overall direction of the trend. This is what hedge fund traders and smart money traders focus more on. The most professional successful traders involve fundamental analysis 70%  and 30% technical analysis for trade execution. Yet, a lot of retail traders only read about technical indicators and watch technical analysis videos. And I think that is the reason most of them lose.

Key Elements of Fundamental Analysis in Forex:-

Here are some key elements of fundamental analysis in Forex that we all discuss in future articles:

• Economic indicators
• Central bank policies
• Geopolitical factors
• Market sentiment
• Intermarket Analysis

If you want to become a successful and consistently profitable trader, the first step you need to take is to master fundamental analysis even if you are an intraday trader. You do believe we are here to make you a successful trader in all aspects. 

I hope this article is helpful for you to understand the Introduction of Fundamental Analysis.

Stay tuned to our website for more tutorials about Forex Market. If you have any suggestions or queries, feel free to Contact us or drop your message in the comment section below.