How to treat the fundamental analysis

How to treat the fundamental analysis

Our focus has been the theory of prices.

What is it and how can it help? Try to stay in more detail on the dominant factors and postulates of the theory.

The theory of prices stems from the theory of perfect competition, and summarized the statement that "the market is always right." Since this statement is usually accepted, even those who can not nourish a special confidence in fundamental analysis.

But each particular trader - is «all», and hence the arguments in the studio!

In analyzing the movement of exchange rates on a pair of quotes is a passive reflection of the value of each currency. Added to the value of the various preferences of participants in the market process. And if we add here the existing ability to anticipate market developments, we get the following conclusions about the market:


The market always has the preferences of a particular direction.

The market may influence the course of events prejudge them.



The combination of these two assertions explains why so often it seems that the market correctly anticipates the event. Using as a starting point of the preferences of participants, we will try to build a model of interaction between the views of participants and the situation in which they participate.

Trading on the Forex, it is necessary to analyze the prevailing preference - it is an observed phenomenon. Other conditions, however, are never equal. To make its trading system, the moment of objectivity, the trader should be to try to learn a little more about these "other conditions". And further we move towards the concept of "basic trend" which has an impact on all the changes quotes foreign exchange market, despite what the current issue of fundamental data. The extent of its impact on the market quotations would, of course, vary depending on the attitudes of participants. Trend quotations can then be presented as a synthesis of "basic trend" and "prevailing preference.

For a proper understanding of the macroeconomic environment, market currency trader must be well understood the nature of economic factors and some elements of fiscal policy, the meaning of basic financial and economic indicators. The rest - business equipment, rather - of technical analysis.
Positive for the currency speculator is that the economic data and key financial figures are published widely, at least for the major market economy countries, and published in the designated time.

Based on previous history and forecasts the market creates its opinion on the expected values of the indicators from which to market and for each currency - move it up or down. This view, each trader can be based on his own analysis of graphs of economic data, or on a comparison of intuitive and weigh the views of different experts and analysts. The best tandem, as practice shows, is that the trader's assessment of its own, from which he looks at other opinions. But the most important in the analysis and decision-making on the basis of fundamental data are all the same understanding of the views of the market. Absolutely accurate forecasts of the economy does not exist, and if you actually published data differ considerably from what the market had expected, he will not remain indifferent to this. Then begins an energetic schedule of course the exchange rate, and this should be ready.

The next stage - it is clearly understood: the view of the market may not coincide with issued forecasts. Professionalism and the trader is the ability to distinguish one from another, as well as to understand what factors are now crucial for the currency markets. The importance of an indicator for the market does not remain forever a given time. Depending on the situation, the problems in the economy and the financial markets, one indicator is at the forefront for some time and remains the focus of traders. Speculations about the expected values for this indicator can move the exchange rate in some way before the output data, after the publication of course can dramatically go in the opposite direction to the whole interest is only due to the fact that the published value of the indicator differ from projections for per share . But then the focus shifts to other markets, but at this rate the market is not showing much reaction. While it may show large deviations from the predictions.

Thus, we certainly all know that the market at any given time there are a lot of speculation, commentary and opinion polls that in a few days before the planned major fundamental news on a particular currency pair drive by forcing speculators to make the active manipulation of the currency in anticipation of high profits. By the time of withdrawal identified by the data, many traders have already completed their plans and now realize profits by buying the currency at a good price for them. For example, buying a currency at a low price that they previously sold expensive. Therefore, the mass buying of currency, of course, will raise its rate, which is quite sufficient to ensure that those losses to traders, who have not followed all this time, the behavior of the market.