The main difference between fundamental analysis of Forex technical analysis is that fundamental analysis is based on the situation: the prices of currencies on the Forex market is a reflection of supply and demand, which in turn depend on the fundamentals of the economy. Followers of the same technical analysis claim that the cause of changes in currency Kurov do not look for and analyze ourselves enough price. It is assumed that it is impossible to find a reason for the change in prices before the market itself is already time to be included in the price. Technical analysis in most cases deals with shorter intervals of time from minutes to weeks. At these intervals (time frames), the fundamental analysis, except for one of its varieties (trading on the news) is practically useless because the fundamentals themselves usually come out once a week, month, quarter.
However, if the purpose of analysis is the prediction of medium-and long-term prognosis in Forex, it is already becoming necessary to conduct research on domestic, the underlying causes of changes in exchange rates. Only this type of analysis will provide an opportunity to assess the prospects of the dynamics of supply and demand for currency. In addition, this approach will give the investor an opportunity not to consider the short-term fluctuations - noise.
The main drawback of the fundamental analysis Forex - its complexity. Just when the necessary skills to trace the links 10-20, as a consequence of changes caused by a single fundamental indicator, but when the fundamentals themselves turns out to be 50 only in one country, each of which has its cause and effect relationships of many of these connections conflict with each other or are reflexive, then you already need a small research center. For this reason, the fundamental analysis of Forex decision-making are variously estimated 10-20% of traders, and most of them owned it superficially.
In addition, as mentioned above, fundamental analysis is almost useless for short-term trading, which means that its use imposes limits on the amount of your funds. You just can not have enough money for the current losses on open positions in several pieces (or remote installation of stop orders) that are possible when trading in the medium-term trends.
Indicators that affect the Forex market and shaping the supply and demand for currency, rather can be divided into several groups:
Indicators of movement of trade and investment capital: These indicators, what was and could be supply and demand for the currency of the institutions which carry out export-import operations.
trade balance;
balance of current accounts;
capital account balance;
balance of payments.
The indicators characterizing the state of the country's financial market: These indicators cover the potential and the current return on investment investment institutions in assets denominated in local currency and, accordingly, current or potential demand for the currency of the investors in the fund's assets and assets with fixed income (bank deposits, government and corporate bonds).
dynamics of stock indices;
amount of outstanding U.S. Treasury bonds and interest rate dynamics and the amount and rate of placement;
behavior of returns on medium-and long-term government securities;
dynamics of interest rates in the interbank money market;
dynamics in mortgage interest rates;
Aggregate macroeconomic indicators: Characterize the state of the economy as a whole, economic growth and the possible macroeconomic imbalances.
Gross Domestic Product
volume and dynamics of government expenditure
volume and dynamics of budget revenues of the country
deficit / surplus budget
Aggregate consumption
Aggregate private investment
The level of personal savings
Export volume
Import volume
Unemployment
Performance indicators of production and trade: Characterize the current state and prospects of industrial and commercial sector of the economy, including: domestic demand in the country and the willingness of companies and individuals to spend money, the level of industrial development and its dynamics, the potential domestic demand for domestic currency on the part of consumers.
industrial production index;
index of capacity utilization;
volume of industrial orders;
industrial supplies;
Orders for durable goods;
retail sales;
volume of commercial loans;
volume of loans, mortgages;
The volume of consumer loans;
Indicators of Labor Statistics: Characterize the sector workforce, its state and dynamics, and indirectly indicate the future potential demand from consumers for goods and services, as well as consumers' optimism about the future.
Productivity;
Various indicators of changes in the number of employed and unemployed;
Inflation: Characterize the current and potential inflationary pressures in the economy and, consequently, the potential inflationary currency to influence the decision on monetary policy, such as changing rates of refinancing.
consumer price index
Producer Price Index
price deflator of gross domestic product
CPI energy prices
Export price index
price index for imports
average hourly wage
Index of labor cost (cost to company staff salaries)
oil prices
Indicators of monetary regulation of the economy: Indicators of monetary policy are likely, one of the most important. They show what kind of policy in this phase of the economic cycle is going to hold the government and the methods used for this purpose. These indicators include: noma compulsory redundancy rate (s) refinancing operations showed the Ministry of Finance or the central bank's open market, changes in monetary aggregates.
discount rate securities;
Planned placement and redemption of government securities;
Planned involvement of the government or the repayment of external loans (the dynamics of public debt);
Indicators of the money supply (broad money): M1, M2, M3.
Indicators of the business cycle, as well as economic indexes (consumer and business) activity and optimism.
Business Cycle Indicators stoyatsya mainly based on the average dynamics of a set of other indicators of various economic sectors. Indices of activity and optimism - usually questionnaires indicators that reflect the confidence of investors, consumers or other groups of economic agents about their current situation and their future. For example, consumer confidence in the future, an indirect indication whether they will buy durable goods, will use credit and if they're willing to spend money on the whole, rather than delaying them, and confidence in the future companies will directly influence their activity against investment in business expansion. Typically, these indexes are ahead of the economic cycle for the period from months to years. On average 3-6 months.
the index of leading economic indicators,
Index of coincident economic indicators,
index lagged economic indicators
business optimism index of purchasing managers
index of business optimism managers of service industries
Consumer Confidence Index (optimism)
index of business confidence (optimism)
Indicators of the construction industry: It is believed that the construction, more construction cycle as a whole ahead of the general business cycle, so the performance of construction are used as leading indicators.
number of houses under construction;
number of building permits issued;
Sales of new homes;
sale not new houses;
construction costs;
Analysis of the fundamentals apply to adopt two types of decisions: 1. Decisions about long-term investments in the currency of any country. 2. Solutions to trade on the news. We will not consider them separately. In the tutorial, each indicator will be described in such a way that you can understand how, on the one hand, the indicator directly affect the supply and demand of currency (long-term investment) and, on the other, the mood of the (expectations) investors (trading on the news).
In the process of decision-making needs to be analyzed, taking into account the following factors: 1. What and how it measures on the basis of what data it is calculated, what is the volatility (variability) in the output units in which it is calculated (nominal unity, the dynamics compared to the previous period or to any period in the past). 2. To tell whether a figure (leading to the economic cycle, lagging or coincident). 3. What is the frequency and time-index. 4. Whether it is published once or there are also its preliminary and final, revised values. 5. What are the ranges of fluctuation in different periods in the economic cycle the country, as well as maximum and minimum values for the entire historical period. 6. What is his main influence on the other fundamentals. 7. What are the fundamental parameters have a critical impact on him.
However, if the purpose of analysis is the prediction of medium-and long-term prognosis in Forex, it is already becoming necessary to conduct research on domestic, the underlying causes of changes in exchange rates. Only this type of analysis will provide an opportunity to assess the prospects of the dynamics of supply and demand for currency. In addition, this approach will give the investor an opportunity not to consider the short-term fluctuations - noise.
The main drawback of the fundamental analysis Forex - its complexity. Just when the necessary skills to trace the links 10-20, as a consequence of changes caused by a single fundamental indicator, but when the fundamentals themselves turns out to be 50 only in one country, each of which has its cause and effect relationships of many of these connections conflict with each other or are reflexive, then you already need a small research center. For this reason, the fundamental analysis of Forex decision-making are variously estimated 10-20% of traders, and most of them owned it superficially.
In addition, as mentioned above, fundamental analysis is almost useless for short-term trading, which means that its use imposes limits on the amount of your funds. You just can not have enough money for the current losses on open positions in several pieces (or remote installation of stop orders) that are possible when trading in the medium-term trends.
Indicators that affect the Forex market and shaping the supply and demand for currency, rather can be divided into several groups:
Indicators of movement of trade and investment capital: These indicators, what was and could be supply and demand for the currency of the institutions which carry out export-import operations.
trade balance;
balance of current accounts;
capital account balance;
balance of payments.
The indicators characterizing the state of the country's financial market: These indicators cover the potential and the current return on investment investment institutions in assets denominated in local currency and, accordingly, current or potential demand for the currency of the investors in the fund's assets and assets with fixed income (bank deposits, government and corporate bonds).
dynamics of stock indices;
amount of outstanding U.S. Treasury bonds and interest rate dynamics and the amount and rate of placement;
behavior of returns on medium-and long-term government securities;
dynamics of interest rates in the interbank money market;
dynamics in mortgage interest rates;
Aggregate macroeconomic indicators: Characterize the state of the economy as a whole, economic growth and the possible macroeconomic imbalances.
Gross Domestic Product
volume and dynamics of government expenditure
volume and dynamics of budget revenues of the country
deficit / surplus budget
Aggregate consumption
Aggregate private investment
The level of personal savings
Export volume
Import volume
Unemployment
Performance indicators of production and trade: Characterize the current state and prospects of industrial and commercial sector of the economy, including: domestic demand in the country and the willingness of companies and individuals to spend money, the level of industrial development and its dynamics, the potential domestic demand for domestic currency on the part of consumers.
industrial production index;
index of capacity utilization;
volume of industrial orders;
industrial supplies;
Orders for durable goods;
retail sales;
volume of commercial loans;
volume of loans, mortgages;
The volume of consumer loans;
Indicators of Labor Statistics: Characterize the sector workforce, its state and dynamics, and indirectly indicate the future potential demand from consumers for goods and services, as well as consumers' optimism about the future.
Productivity;
Various indicators of changes in the number of employed and unemployed;
Inflation: Characterize the current and potential inflationary pressures in the economy and, consequently, the potential inflationary currency to influence the decision on monetary policy, such as changing rates of refinancing.
consumer price index
Producer Price Index
price deflator of gross domestic product
CPI energy prices
Export price index
price index for imports
average hourly wage
Index of labor cost (cost to company staff salaries)
oil prices
Indicators of monetary regulation of the economy: Indicators of monetary policy are likely, one of the most important. They show what kind of policy in this phase of the economic cycle is going to hold the government and the methods used for this purpose. These indicators include: noma compulsory redundancy rate (s) refinancing operations showed the Ministry of Finance or the central bank's open market, changes in monetary aggregates.
discount rate securities;
Planned placement and redemption of government securities;
Planned involvement of the government or the repayment of external loans (the dynamics of public debt);
Indicators of the money supply (broad money): M1, M2, M3.
Indicators of the business cycle, as well as economic indexes (consumer and business) activity and optimism.
Business Cycle Indicators stoyatsya mainly based on the average dynamics of a set of other indicators of various economic sectors. Indices of activity and optimism - usually questionnaires indicators that reflect the confidence of investors, consumers or other groups of economic agents about their current situation and their future. For example, consumer confidence in the future, an indirect indication whether they will buy durable goods, will use credit and if they're willing to spend money on the whole, rather than delaying them, and confidence in the future companies will directly influence their activity against investment in business expansion. Typically, these indexes are ahead of the economic cycle for the period from months to years. On average 3-6 months.
the index of leading economic indicators,
Index of coincident economic indicators,
index lagged economic indicators
business optimism index of purchasing managers
index of business optimism managers of service industries
Consumer Confidence Index (optimism)
index of business confidence (optimism)
Indicators of the construction industry: It is believed that the construction, more construction cycle as a whole ahead of the general business cycle, so the performance of construction are used as leading indicators.
number of houses under construction;
number of building permits issued;
Sales of new homes;
sale not new houses;
construction costs;
Analysis of the fundamentals apply to adopt two types of decisions: 1. Decisions about long-term investments in the currency of any country. 2. Solutions to trade on the news. We will not consider them separately. In the tutorial, each indicator will be described in such a way that you can understand how, on the one hand, the indicator directly affect the supply and demand of currency (long-term investment) and, on the other, the mood of the (expectations) investors (trading on the news).
In the process of decision-making needs to be analyzed, taking into account the following factors: 1. What and how it measures on the basis of what data it is calculated, what is the volatility (variability) in the output units in which it is calculated (nominal unity, the dynamics compared to the previous period or to any period in the past). 2. To tell whether a figure (leading to the economic cycle, lagging or coincident). 3. What is the frequency and time-index. 4. Whether it is published once or there are also its preliminary and final, revised values. 5. What are the ranges of fluctuation in different periods in the economic cycle the country, as well as maximum and minimum values for the entire historical period. 6. What is his main influence on the other fundamentals. 7. What are the fundamental parameters have a critical impact on him.
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