Fundamental Analysis

If you new to the forex business "fundamental analysis" is one that is weird. You may not be so familiar about what is fundamental analysis and why he needed this in the forex business. If needed, how much should be fundamental instruments used in trading? What size?

Okay for beginners colleagues, I will try to discuss a bit about the term "Fundamental Analysis" with the meaning you can understand about your business that will do.

Okay let's just start, taking a fundamental approach to analysis based on the news or rumor is circulating. As we know together, such as financial exchange and money market shares are very sensitive to the news that are circulating in the market.

In general, the analysis on forex trading consists of two parts namely technical analysis and fundamental analysis. Analysis of technical base with the calculation of mathematical analysis (usually using statistical data) and using the chart (chart - that is the usual technical analysis called chartist) as the main weapon.

Fundamental analysis to take a different approach. Basis used is the news or rumor circulating in the market.

As we know together, such as financial exchange and money market shares are very sensitive to the news that are circulating in the market. Thus going to the forex trading market. Even now it can be said that the menggerakan exchange is exactly the news itself. In other words, the news is of an emotional market changing the balance point on the currency.

If you are a commoner, we may not be too concerned with the increase in U.S. interest rates for example. But not for a trader. The increase in interest rates by Central Bank The Fed (U.S. bank sentralnya) can mean that the strong U.S. dollars to hundreds of a point means that the money can be obtained therein. Or vice versa, losses may occur if action is not taken in accordance with the market.

That's why news is affecting the investment portfolio of a forex trader. If you want to be a reliable trader, it is now time for you also learn fundamental analysis.

Example of interest rate increase over just one example of the fundamental news in the regular release every day. Well, why the interest rate increase could mean the currency and what the impact on my investment, it is that you need to learn.

There is a logical flow and the laws of economics apply here (although sometimes not 100% valid - analysis fundamental fact associated not only with the logical reasoning of monetary policy or the news out, but also how the market reacts to news or market psychology).

Source, type, and the key factor in Fundamental Analysis

News that can be issued various survey results, even up to a monetary policy that is incidental events such as terrorism. Information can be obtained / issued through:

• Official Institutions / Government
• Print media / electronic (TV, website, newspaper, etc.)
• Individual

There are more than 50 news that could affect currency movements. From news to 50, the effect is quite clear that is caused or ride down to the currency of the country. Fundamental news that is positive on the country that issued the currency means that countries concerned will be strong and the currency weakened party.

For example in the currency GBP / USD, if the U.S. raised the level of the tribe of the interest rates (again I take the example that the interest rate) then the exchange rate will be strong against the Dollar Pounds Sterling. And that means Pound weakened against the Dollar as a news release by the U.S. are positive towards currency.

For this type of news, there is some kind of news if viewed from the field:

• Economy
• Politics
• Security (global, regional, country)

Determines in its fundamental analysis:

• Speed information
• Source of information
• Information processing & forecasting (prediction)

Advantages and Disadvantages of fundamental analysts

Excess:

• Easy
• Can determine the global price
• Determines long-term trend (long term)
• In some cases effective for short term trading

Disadvantages:

• Can not determine the exact
• Eat a lot of time in search of news sources
• Subjective, too many assumptions to be used

Analysis of the most important thing about driving is as Fundamental Price! Of not yet ..

Talk about the economy and how the market reacts to news is not talking about right and wrong or talk about the logic that should occur.

That is about market psychology. About the millions of people in the psychology of this world. All you need to understand is that the market does not care about the economic book that you read or who have a tendency over time. For example: The increase in interest rates. In the history and lessons we learn during this, if the interest rate a country to increase the lead to this quickly currency of the country become strong.

But do always so? The answer is not! Ok, Let's take an example; At The Fed raised U.S. interest rates by 25 bp, to know what's going on? The weakening United States dollar! Most beginners do not understand why it can happen. In the beginning I was not. But in fact happens is that the market reacts to the interest rate increase this time because the Fed has given the signal a few days earlier and the increase has occurred several times. But who would suspect that when such news is not showing?

Location of the point where the balance occurs. Fundamental indicator is triggered price movements. But only in the form of price and the seller. That is needed is to know the buyer and seller reactions to the news that the majority appear. Can be said too often this is a fake because it is not easy. There are millions of parties in the exchange of foreign currency and to predict the majority of their work is not that easy.

That's why the day traders often make the news not as a fundamental decision determines Buy / Sell them but more as a reference of what will happen to the price. They use technical analysis in taking a position that is due to be more exact, so clear.

Ok, here may have to appear in a discourse of yourself. Subject which is better, I think no one is better between technical and fundamental. But I wanted to emphasize here is that both can not stand on its own and must be used to cover each others weaknesses.

All of it depends on you, as I often say that the decisions that are in the your own. Trading with the art and have a distinctive style so you can find your own style of trading often with exercise. And if you have found the style of trading that is often called the Trading Style, you will undoubtedly have success in this business forex.

Hopefully useful to all of us ..
Click the register when you are ready!