Fundamental analysis: What and why should you use it?

by Editor 4,600 views

In the world of Forex, there are lots of analysis and not all of them are followed with the same discipline. There are three types of analyses in Forex. They are Forex technical analysis, Forex fundamental analysis, and Forex sentiment analysis. When most of the traders are using the Forex technical analysis, you should also use the fundamental analysis in Forex. This article will tell you why you should use this fundamental analysis and also give you an idea of this analysis. You should know that all of these analyses in Forex are important. If you trade the market with only one analysis, you can miss out important points. You need to know what is happening in Forex and by using all three of them you can trade the market for profit. It is important that you know what this fundamental analysis is and how to use it in your trading.

Trading is an art. Only 5% of the traders are able to make money in the online trading industry. Can you tell the exact reason behind this tremendous low rate of success? The only reason behind a large number of losers in the financial industry is lack of trading knowledge. Many novice traders often want to trade with the reputed IB brokers without knowing the Features of IB. First of all, you need to find a reputed brokers by doing some extensive online research. But in order to understand which Features of introducing broker you should look upon, it’s highly imperative that you develop a basic knowledge of this industry. There are many brokers who will offer you demo trading account for free. Feel free to open an account with them and demo trade the market to understand the basic nature of the financial industry.

Forex fundamental analysis

First of all, this is an analysis that is used by traders to analyze the market. This fundamental analysis is like the classic analysis that analyzes the factors of a market in Forex like the currency price, inflation, interest rates of different countries and also the latest trade agreements of different countries that can have an impact on this investment market. As Forex traders trade in an investment market, the fundamental analysis also has the investment world in it. This analysis is more in a fundamental way like analyzing the past histories of Forex and trying to predict the future trends. When the technical analysis is all about the technical things like the indicators, patterns, and trends, the fundamental analysis uses the classic news of the market to help the traders.

If you trade with a high class broker then you will be surprised to know that every single one of them will give you a detailed report about the major fundamental news release. So it’s highly imperative that you learn more about the Features of IB before invest your whole money.

Why should you use this analysis?

Many traders like to use technical analysis in their trades. It is not wrong if you are using technical analysis along with fundamental analysis. Forex trading is like a chair and if you do not have all the four legs that you need, you cannot sit on the chair. This chair may support your weight for a short time, but you will fall down when you will be sitting here for a long time. Traders in Forex use this analysis to know the market trends. As this is the fundamental analysis, it uses the available market information to process them into useful information to trade the market for traders. If you are using this analysis, you can know if you are on the right track. It will also help you to trade the market more successfully. Technical and sentiment analysis is not profitable if you are not using this fundamental analysis. When Forex news and past trading history plays a big role, you should use fundamental analysis in your trades.