Fundamental analysis is the study of the economic a犀利士 nd political factors that can affect the value of a currency. The goal of fundamental analysis is to determine a currency’s intrinsic value, which can be compared to its market price to determine if it is over or樂威壯 undervalued.
Some key points to consider when conducting fundamental analysis include:
Interest rates: Higher interest rates can make a currency more attractive to investors, as they will receive a higher return on their investments.
Economic growth: Strong economic growth can indicate a healthy economy, which can lead to a stronger currency.
Inflation: High inflation can erode the value of a currency over time.
Political stability: Political instability can lead to uncertainty, which can cause investors to avoid a particular currency.
To improve your fundamental analysis, it’s important to stay informed about current economic and political events, and to have a good understanding of how these events can affect currency values. Additionally, it’s important to look at multiple data sources and to be aware of any biases or limitations in the data. Furthermore, you can use economic indicators, such as GDP, CPI, and PMI.
Forex Factory is a great website to use to keep up to date with economic news releases that could affect the currencies that you are trading. News releases are categorised into three colours: yellow, orange and red letter. Red letter news events will cause more volatility to the related currency, meaning a higher chance for a larger potential move.
Personally, we suggest avoiding red letter news as higher market volatility can allow for banks and institutions to manipulate price, targeting areas with large amounts of orders to stop out retail traders.
We hope that this helps you with your trading journey and potentially gets you that step further to becoming funded with us at Bespoke Funding Program!
Good luck Traders