The success of forex trader depends on many aspects. Among them is the ability to comprehensively see the situation in the financial market. Fundamental analysis is one of the main types of market analysis. It represents a study of the political and financial situation in some important countries. The financial situation of every country forms the rates of the national currency. Traders who trade according to the fundamental analysis have to be aware of the political situation of the world’s major countries. A trader is getting familiar with the economical or political situation in the certain countries. After that he or she concludes whether there is a potential for a national currency to go up or down. Basing on this conclusion, a trader makes a trading decision to buy or sell. This is how the fundamental analysis works.
Fundamental analysis has two types of information. It can be divided into two groups, predictable and unpredictable. The first group includes the data that is announced in a certain time and a trader has an idea about it. Moreover, such data have a partly novelty effect, because traders already have got familiar with the predictions of experts about them. Usually this kind of data is about the macro economic situation of development of a particular country or the whole region.
The most common data of this type is the inflation rates, indicators or economic activity and unemployment, budget deficits, interest rates, etc. As for the unpredictable factors, they are usually surprising events mainly in the political sphere. For example, the unplanned resignations in the government, central banks, etc. Unexpected factors can also be natural disaster, military conflicts, etc. The effects of these events whose influence on the forex market may be quite noticeable.
Forex traders simply need to take them into account when trading.
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