Learning the basics of Forex fundamental analysis


In its broad part, Forex trading is analyzing the different market and currency influencers and making an executable decision to earn money from a particular market condition. Fundamental Analysis is a big term that discusses pure global aspects that impact on demand and supply of currencies, equities, and commodities. Many traders use technical and fundamental methods to determine where and when to place trades. However, trades also tend to favor one aspect over others.

This post will unearth the most common Fundamental analyses that a trader should contemplate to determine current and near-future market conditions.

Central Bank

Most sources for fundamental trading are volatile. Central Bank has earned a reputation to be one of the most volatile among those sources. The list of actions taken by Central Banks is vast. From raising or lowering the interest rates, maintaining their current percentage, suggesting their imminent change, introducing non-conventional policies, intervening for others or themselves, to even revaluing their currencies, Central Banks take care of all of them.

The process of Central Bank analysis is often poring through speeches and statements by central bankers. Trying to mimic their thinking style can sometimes reveal what is coming soon.

Different Economic Releases

Fundamental Analysis gets a little unpredictable and tenuous when it comes to trading economic releases. Even minds celebrated as the greatest of all in the industry struggle to understand the upcoming economic releases’ nature and consequences they are to bring about. Most of such brilliant people have premade models that can take various criteria into account, but still, fail to predict what is coming with those economic releases. That’s the reason behind the vehement movement of the market after a crucial economic release.

Many retail and hedge funds choose to go with the consensus of those brilliant minds. It makes the market follow the directed way by those experts. If that consensus becomes invalid after the economic release, the market will take the actual result naturally. So, at stocks trading, try to keep yourself tuned with such high-impact news so that you can find the direction of the market movement.

If the result is better than the prediction, the market will respond positively, and vice versa will happen if the result turns out less than the actual consensus. The tick to trade such economic releases lies in the ability to determining the right moment to commit. Do you want to trade after or before the release? Both methods have their perks and inconvenience.

Trading before the news release may enable you to take advantage of the market following the predicted root. But other fundamental events can have more impact on the market than just the consensus.

Trading after the release means a trader is trying to book a position in a low-volume market which is a challenge to him for getting his desired price.

World Politics and Tension Raised by it

Countries all over the world are never aligned with one another altogether in their prospects, opinions, visions, goal, perceptions. There are always conflicts and brawl all across the world all the time of the year. The tensions of these conflicts are always on the horizon. These tensions and conflicts have manifold impact on different tradable goods by changing the supply, or even the certain products’ demand.

For example, a region where war is ongoing and has facing difficulty in having oil supplied can face a rise in the oil’s price. Whereas a peaceful, calm region which is not associated with any kind of geopolitical tension can consume lower price in oil as the oil supply hasn’t been threatened there.

There are also other Fundamental Analyses equally important to the ones described in this post. But to keep things simple and more understandable, we choose to discuss only these three analyses. Make sure you have a splendid understanding of all of them and then proceed to learn others.


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