The Fundamental Analysis is the study of the factors (economic data, news, forecasts, balance sheets) that can have an impact on the performance of an index or, in the case of Forex, of a currency against other.
Fundamental analysis, together with technical analysis, is the study that allows traders to understand how to invest their money. Thanks to this study, it is possible to understand the changes in the trend and on the basis of the data obtained, understand how to invest.
Fundamental analysis is the basis of every good investment and the goal of this column is to provide a solid basis for understanding this type of analysis.
It is necessary to have an accurate picture of the language and concepts behind the fundamental analysis, to be accompanied by technical analysis, to establish a good trading strategy.
Fundamental analysis examines all those underlying forces that influence the economy, companies, currencies in the Forex market. In particular, we try to understand those macroeconomic factors that can affect the market, such as the inflation and economic growth of a country.
By means of the studies carried out with fundamental analysis, we try to identify the intrinsic value of a currency, for the Forex market, or of a company, for other types of market.
As with most analyzes, the goal is to derive a forecast (and a possible profit) about future price movements. The elements of macro and micro economics that are examined are all aimed at understanding the stability of a certain society, firm or currency.
In particular, however, fundamental analysis revolves around macroeconomic data (also called market mover) which have an influence on market trends. The difference between fundamental analysis and technical analysis is that the former seeks to understand how the company will evolve by following only the company’s performance.
The technical analysis instead tries to understand the trend that will occur based on the graphs and the history of the company or currency.
The main tool for following the fundamental analysis is the Economic Calendar updated in real time.
