Fundamental analysis

Introducing basic analysis

 

What is Fundamental Analysis?

Fundamental analysis is a method that attempts to predict the intrinsic value of an investment. It is based on the theory that the market price of an asset tends to move towards its 'real value' or 'intrinsic value'.
Fundamental analysis in Forex entails predicting the price valuation of a currency and its market trends by analyzing current economic conditions, government policy and societal factors within a business cycle framework. Forex Traders gauge a country's economic state by examining macroeconomic indicators covering:

• Interest Rates Announcement
• Gross Domestic Product (GDP)
• Consumer Price Index (Inflation) and Spending Indicators
• Employment Indicators
• Retail Trade and Consumer Confidence
• Balance of Trade Surplus or Deficit
• Government Fiscal and Monetary Policy

Visit our economic indicators page and learn more about the different indicators and their impacts on the markets.

Fundamental Analysis Benefits

Determining the intrinsic value of an investment

Identifying long-term investment opportunities

Fundamental Analysis Drawbacks

Too many macroeconomic indicators and indicator can confuse novice investors

Method of fundamental analysis is the testing of the key factors affecting the existence of an active economy, an industrial group and the company. As with most analytical methods, the goal of this approach is to make predictions and profits from the operation of future prices. At company level, fundamental analysis may include testing of projected financial data, management, animation and competitive economy. At the industrial level, can have the testing of supply and demand of the product is recommended. Also at the national economic level (the level that we're interested in), fundamental analysis focuses on the economic data to capture current and future development of the economy.
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 The goal of this guide is to provide a foundation for understanding the basic methods of analysis of this. This method is mainly up to the number of young investors - those who have not read even a financial balance sheet of an income statement. While you can not "an outstanding player" by the end of this guide, you will get a solid foundation of understanding about the language and scene analysis of currency markets and can use Use it improve your knowledge in other areas that do not feel completely lost.
The largest part of fundamental analysis including research delves into the financial statements. Also known under the name quantitative analysis (quantiative analysis), this method includes tracking the index n corrupt revenues, expenses, assets, liabilities and all other aspects of an entity economy as companies or countries. Fundamental analysts look at this information to enhance the visibility of future activity of an economy. Much of this tutorial I will talk about the types of key news, financial reports and how important these factors combined together
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To predict future prices, combining fundamental analysis analyzing economic, industry and other macro factors to grasp the actual value of the current and predicted future values. If the actual value is not equal to the current value, technical analysts believe that one pair is being undervalued or two is being overestimated and sooner or later the market will price orbiting toward the actual value that