Fundamental analysis.

It is far from a secret that there are two global concepts in forecasting trading assets, namely fundamental analysis and technical analysis. The most interesting thing is that in most cases, traders prefer the latter, because the development of indicators and visual techniques for evaluating the chart is much easier. Of course, the postulate that the price during the movement took into account all the factors of influence (the creators of technical analysis appeal to this) warms the soul. But how then to explain the sharp collapses, breakouts and the appearance of reversals at the time of the news? Be that as it may, but it is the economy that regulates the price, and not vice versa. Therefore, in today's article we will try to briefly understand the basics of fundamental analysis, get acquainted with the main macroeconomic indicators and show you a simple decision-making logic. Fundamental analysis is a direction in price forecasting, which involves identifying overvalued or undervalued groups of assets based on economic and political data. Despite the fact that in most cases traders try to separate politics from economics, in practice, studying it significantly strengthens fundamental forecasts.

By the way, many mistakenly believe that the use of fundamental factors is necessary only when making long-term forecasts. However, the experience of trading on the news of a huge number of traders around the world perfectly demonstrates the absurdity of these judgments. Also looking ahead, we want to dispel the myth that fundamental analysis is complicated. Economic factors of influence. Macroeconomic indicators Many people, when they hear about fundamental analysis, in confusion begin to think about higher economics, index calculation formulas, and the like. In fact, you absolutely do not need all this complex information, because the main thing is to understand how this or ionic event affects, and not how the analytical department calculates it. The basic basis for fundamental analysis are macroeconomic indicators.

With their help, analytical agencies demonstrate the dynamics of different sectors of the economy. By the way, in order to quickly operate with this data, there is a tool called "Economic Calendar". Among the factors and influences that a trader must pay attention to, we highlight the following: monetary policy; Data on employment and unemployment; Global economic indicators (GDP, Balance, Inflation). monetary policy The world of investments and the hearts of those who manage large cash flows are ruled not by economic growth or the fall of the country, but by the availability and cheapness of a monetary resource. It is the cost of the credit resource that is regulated by the interest rate set by the Central Bank. It must be understood that the lower the interest rate, the cheaper money can be attracted from investors in the real economy. Therefore, the relaxation of the interest rate leads to the revival of the economy, its recovery and development.

However, low interest rates do not like speculative funds that do not invest in the real sector of the economy, but only place deposits and buy government debt. An increase in the interest rate is a negative signal, as access to cheap money becomes expensive, which will immediately affect the entire economy. At the same time, speculative traders and investors can pour into securities and buy up debts, since at this rate, such an investment style as the Carey Trade works great. It is worth noting that traders very often trade on expectations, as well as at the time of the publication of the decision by the Central Bank. Therefore, it is very important to follow not only the rate itself, but also the appeals that officials make to the public with their reports. Employment and Unemployment Data The most obvious indicator of the growth of the economy of any country is the number of people employed in it, as well as the number of people who are unemployed. Naturally, it is necessary to understand that the reduction of unemployment speaks of development, not only from an economic point of view, but also from a budgetary one.

The fact is that the more people are unemployed, the greater the financial burden falls on the budget when paying unemployment benefits. Therefore, the publication of statistics on the number of people employed in certain sectors of the economy, data on the number of unemployment benefits and changes in the number of the unemployed themselves, have a huge impact on the price. Global economic indicators We include GDP, data on public debts (their change), trade balance and inflationary processes as global economic indicators. GDP, as the most important indicator of growth (demonstrates the entire gross product), is published quarterly and is taken into account by all institutional investors. It is very important to study data on the trade balance and inflation. The fact is that the trade balance shows a skew between imports and exports, which directly affects the availability of foreign exchange reserves. Inflation, namely its growth, is capable of absorb absolutely any economic growth, so its change also needs to be monitored.

In conclusion, it is worth noting that fundamental analysis only from the outside seems incredibly complicated. If you study how the economic calendar, which is on most broker sites, works, then you will have no problem at the moment, both with the search for events and with their interpretation. .