Fundamental and technical analysis.
Forex market relies heavily on two types of forms of analysis – technical and fundamental analysis. In the next few posts will introduce you to the basics of these two types of analysis in the Forex market. Let’s start with fundamental analysis.
In Forex Market – Fundamental analysis relies exclusively on studies of the causes of change in prices in Forex trading or analysis of world events. For example, bad news as: act of terrorism, natural disasters, adverse events from the finance ministries of countries and many others. Such news may be very much necessary to remember the most important thing, namely that nothing in this world happens without incurring other consequences. Of course, not all events have a strong impact on prices in the Forex Market, so there are special economic calendars, which are referred to officially planned events that can have a major impact on prices in the Forex, which is need to be monitored when trading on foreign exchange market. Keep in mind also and that – two events might compensate their effects on the Forex market. In Forex there are many events that need to understand in order to successfully predict price movements in Forex Market.
Fundamental analysis is based on economic indicators, such as events and news happening in financial markets.
Taking into consideration these indicators Forex trader decides whether the state of a country improves or reverse, and depending on that, he suggests in what direction currency goes.
Forex brokers ensure tight fundamental indicators, here the main ones: Gross domestic product, report on employment, retail, consumer price index, industrial production, trade balance and more.
To succeed in the Forex is advisable to include in your strategy some basic indicators and it is good to abide by them. Tracking the economic calendar will answer you for sharp price movements in the Forex market.