Introduction to the fundamental analysis
The most important and complicated component of the currency dealing is ability to analyze the tendency of market changes and therefore to forecast which factors will influence on the currency rate and how. The probability of a quick profit taking and quick losses is included in the price trend. Thus, correct forecast of the market trend, estimation of different events, correct reaction to the speculations and expectations аre the necessary component of trader?s successful work. There is a great deal of factors which influence on the whole market as well as on the separate instruments (currencies, shares, futures).
There are two main methods of the market analysis — fundamental and technical. The fundamental analysis estimates the market situation in the context of political, economical, financial and credit aspects. The technical analysis is based on the methods of graphical research and mathematical analysis.
In the context of the fundamental analysis monetary, political and economic events in the world are studied. These events may influence on the market development. The most important here is information about economic indicators of the countries, work of exchanges and large companies such as market-makers, interest rates of the central banks, government's economic rate, probable changes in the country's political situation, various speculations and expectations. The fundamental analysis is the most complicated and important part of the work at the forex market. To perform the fundamental analysis is much more difficult than any other, as the same factors have different influence on the market in different situations and important factors may shift to the insignificant ones. Except some more formal rules experience of work at the market is needed here.
Fundamental factors are usually estimated from two points of view:
- Influence on the interest rate;
- State of the country’s national economy.
