Basics of fundamental analysis necessary for working on the stock exchange

For successful trading, it is usually necessary to use fundamental Forex analysis simultaneously with the use of technical analysis.

No matter how the techies claim that technical analysis includes everything, the integrated use of both directions of analysis of the Forex currency market still has a greater effect.

The main advantage is that you know in advance where the price may go, and do not react belatedly to changes in the trading terminal. If technical analysis is based on the history of the market, then fundamental analysis allows you to see its future and be one of the first to enter the market.

Moreover, to trade Forex, it is not at all necessary to conduct an in-depth study of the economic situation in the country and analyze the prospects for the next few months; it is quite enough to know the basics of fundamental analysis and correctly assess the impact of events on the exchange rate.

This is the simplest option for receiving trading signals to open positions, so this is where you should start learning the basics of the forex market.

First of all, it should be taken into account that trading is carried out in currency pairs, which means that the price of the instrument will change depending on the role of the analyzed currency.

Let's consider this point on such popular currency pairs as USD/JPY and GBP/USD - in the first case, the US dollar is the base currency, in the second it is the quoted currency.

Therefore, when positive news regarding the US dollar is released, the price of the first currency pair will rise, and the second will fall, causing a downward trend.

Basic Fundamental Analysis

The main sources for fundamental analysis are ordinary news; it is their release that changes the direction of the trend or, on the contrary, strengthens the existing trend.

Therefore, to work effectively, you simply need to monitor the appearance of news on the currency of your choice; the easiest way to do this is directly in the trader’s terminal; to do this, download and install the latest news indicator.

After installing the indicator, all you have to do is wait for the release of new news.

You can also get the necessary information from your broker’s news feeds or on other financial sites.

The second trading option could be trading according to the Forex calendar , which indicates the time of a future event. Moreover, even the expectation of news can form a certain trend, especially if it is known in advance what the expected news will be.

What to pay attention to.

Usually a lot of news comes out during the day, but not all of them can affect exchange rates, so you should immediately highlight the main ones, the publication of which will definitely affect the trend.

These include:

• Loud statements by politicians - for example, the crisis in the eurozone is over or, on the contrary, we are facing the collapse of the euro. Such statements almost always cause panic on Forex and sharp fluctuations in the exchange rate.

• Natural disasters and other cataclysms deal a blow to the economy of the country in which they occurred, and therefore cause a weakening of the national currency.

• Publication of economic and financial indicators - this is the publication of the values ​​of various indices and other important information relating to the field of finance and economics. We will consider this aspect in more detail in other articles.

• Analyst forecasts – there are a number of analytical agencies whose forecasts have enormous weight in the financial world; often their publication is enough to cause changes in the exchange rate.

The basics of fundamental analysis make it possible for even a novice trader to make money on Forex; for successful trading, it is enough to create your own simple trading system, the main points of which will be - news release - opening a deal - leaving the market with a profit.

You can also try to use analysts’ forecasts if they have a strong influence on the trend, for example, everyone unanimously declares that Bitcoin will rise in price and it is starting to rise in price.

This moment can also be used to make money, but it should be borne in mind that the trend caused by rumors and forecasts will not last long unless it finds more compelling confirmation.

A separate category can be identified as fundamental analysis designed to determine the real value of shares, but this is another topic that we will talk about in the following articles on our website.