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Thread: Basics of Fundamental Analysis

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    Default Basics of Fundamental Analysis

    Depending on the principles underlying the market research, it can be either technical or fundamental. The concept of technical analysis is based on the statement that the relationship between the demand and supply represented in the price chart is complied with rules of mathematics. According to the fundamental analysis, the market is changing under political, economical and financial factors.

    Taking that into an account, fundamental analysis evaluates information of economic, financial and political nature, which directly or indirectly influences the market price development; in particular, the principal economic indicators of the leading world economies which can have an impact on the rates of main currencies. GNP, GDP, inflation rate, unemployment rate, CPI and PPI indexes, commodity and industrial price index, trade balance and balance of payment are the most significant indicators.

    GNP is the key indicator for the national economic climate which includes such characteristics as consumption, investments, government expenditures, exports and imports. GNP is in direct proportion to exchange rate: high GNP level indicates good economic condition and inflow of foreign investments, which in their turn raise demand for national currency. Prolonged GNP growth can cause inflation to lower which the interest rate rise is used, as a result demand for currency is growing.

    Unemployment rate demonstrates ratio between able-bodied and unemployed population which ideally should not exceed the 6% scale. The rise in unemployment level negatively affects the currency rate - it falls down. Inflation has the similar effect on the currency rate and can be measured by price growth rate. Herewith the inflation and unemployment indicators are in inverse proportion.

    This analysis also includes events, important for the policies of different countries: elections, economical reforms, undertaking of international agreements, etc. The main financial factor which is considered by analysts is the key interest rate of central banks which determines the total profitability of investments into a country’s economy. Growth of this indicator generates favorable conditions for the national currency growth.

    Besides, the national currency rate is influenced by natural disasters, terrorist attacks, emergency and other force majeure situations.

    Fundamental analysis, considering the difficulty of evaluating numerous indicators in different countries, is carried out professionally by qualified specialists.

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    I still learn about fundamental analysis when trading. Try to more improve it to get more maximal profit in forex. Still use demo account to hone it and for real account, technical analysis which i use more.

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    Doing basic fundamental valuation is quite straightforward; all it takes is a little time and energy. The goal of analyzing a company's fundamentals is to find a stock's intrinsic value, a fancy term for what you believe a stock is really worth - as opposed to the value at which it is being traded in the marketplace. If the intrinsic value is more than the current share price, your analysis is showing that the stock is worth more than its price and that it makes sense to buy the stock.

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    It must be learned by trader. Without studying fundamental analysis, which is a combination of planned and unexpected news it will be hard to predict the future price movements. Check the website for more information: https://freshforex.com/training/literature/

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    Fundamental analysis is the cornerstone of investing. In fact, some would say that you aren't really investing if you aren't performing fundamental analysis.Because the subject is so broad, however, it's tough to know where to start. There are an endless number of investment strategies that are very different from each other, yet almost all use the fundamentals.



    The goal of this tutorial is to provide a foundation for understanding fundamental analysis. It's geared primarily at new investors who don't know a balance sheet from an income statement.While you may not be a "stock-picker extraordinaire" by the end of this tutorial, you will have a much more solid grasp of the language and concepts behind security analysis and be able to use this to further your knowledge in other areas without feeling totally lost.

    The biggest part of fundamental analysis involves delving into the financial statements. Also known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and all the other financial aspects of a company. Fundamental analysts look at this information to gain insight on a company's future performance. A good part of this tutorial will be spent learning about the balance sheet, income statement, cash flow statement and how they all fit together.

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    Quote Originally Posted by Lucien View Post
    It must be learned by trader. Without studying fundamental analysis, which is a combination of planned and unexpected news it will be hard to predict the future price movements. Check the website for more information: https://freshforex.com/training/literature/
    most of the trader do depend on fundamental analysis as it is a bit easy to formulate than the technical analysis.

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