Fundamental analysis is the study of factors affecting supply-demand forces in trading. While
most traders use fundamental and technical analysis to trade, some favour one over the other.
However, if you like to use fundamental analysis to trade, there are a variety of sources you
Central banks are the most volatile source that affects trading. They can adopt a variety of
steps, including raising interest rates, lowering them (even to negative levels), keeping them
the same, implying that their stance will change soon, introducing non-traditional policies,
intervening for themselves or others, and even revaluing their currency. Fundamental analysis
of central banks is frequently a process of studying over central bankers' comments and
speeches, as well as attempting to think like them in order to predict their next action.
Trading moments before the economic release means that you have an opinion on whether
the actual release will be better or worse than the consensus. But you could be dreadfully
wrong and risk large losses on essentially a coin flip. Trading moments after the economic
release means that you will be trying to establish a position in a low-volume market which
presents the challenge of getting your desired price. If you trade well before the release, you
can try to take advantage of the flow toward the consensus expectation, but other
fundamental events around the world can impact the market more than the consensus read. If
the consensus fails to predict the final result, the market then usually moves in the direction
of the actual result – meaning that if it was better than consensus, a positive reaction unfolds
and vice versa for a less-than-consensus result.
Whether you like it or not, some countries throughout the world don't get along with one
other or the rest of the world, and conflicts or wars are occasionally on the horizon. These
tensions or disputes can have a negative impact on tradable goods by altering supply or
demand for specific items. Increased violence in the Middle East, for example, can place
pressure on oil supplies, causing prices to rise. A relative quiet in that part of the world, on
the other hand, can lower the price of oil because supply isn't endangered. With your
fundamental perspective, being able to correctly foresee how these events will end may be a
way to get ahead of the market.
Numerous weather-related events can cause price fluctuation. The most obvious example is
winter's proclivity for producing large snowstorms, which can drive up natural gas prices,