What is Forex Fundamental Analysis? Table of Contents

To evaluate trading opportunities, investors use fundamental and technical analysis.

Investors may choose to take a conservative low risk, medium risk, or high-risk approach by using limit orders and stop orders to manage risk in addition to employing fundamental and technical analysis.

What is Fundamental Analysis?

Fundamental analysis consists of macro strategic assessments of where a currency should be trading based on but the price action itself.

These criteria often include the economic condition of the country that the currency represents, monetary policy, and other fundamental elements.

Fundamentalists track and study economic figures, political news, market expectations, monetary policy, Central Bank operations, and market intervention and analyze it to predict its potential impact on the markets.

Fundamental analysis alone is often insufficient to use when dealing with currencies, commodities, and other “margined” products.

This is because the fundamental analysis does not provide specific entry and exit points and therefore makes it difficult to control risk when using leverage.

Trade Forex with Fundamental Analysis

Differences between Fundamental and Technical Analysis

Technical analysis is applied only to the price of the market, ignoring fundamental factors.

As fundamental data can often provide only a long term or delayed forecast of exchange rate movements, technical analysis has become the primary tool used to successfully trade with shorter-term price movements, and to set stop loss and profit targets.

Fundamental analysis is more effective in predicting trends for the long term (longer than one year), while technical analysis is more appropriate for shorter time horizons (0-90 days).

What is Forex Technical Analysis?

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