Fundamental Analysis (Part 5) by Imran Mukati
Necessary & Useful
Forex traders need to keep an eye on fundamental data such as interest rates, central bank policies, and economic data. In part 5 of this six-part series, we’ll take an in-depth look at these fundamental variables.
Just as in equity trading, there are two basic approaches to formulating forex trading strategies. In my previous articles in this series, I already introduced you to technical analysis. Its counterpart is fundamental analysis, which looks at issues like interest rates, central bank policies, and economics to make trading decisions. In this way, it is similar to dissecting the financial statements of a company when deciding whether to buy its stock.
FUNDAMENTALS HAVE THEIR PLACE
Because of the nature of the underlying mechanics, fundamental analysis is geared more for longer-term trading. Technical analysis tends to be more appropriate for short-term trading. However, it is possible to combine aspects of both.