One of the key factors, which has influence on any trader’s success is his ability to correctly predict the market movements. The two main methods are technical and fundamental analysis of Forex market.
An important feature of fundamental analysis is its global nature. Events, which are analyzed in fundamental analysis, have long-term influence on supply and demand on the currency market. This information is composed of the news about the world’s biggest political and financial events. It’s hard to overestimate the influenced the news has on financial markets: when the most important news is published, the market volatility increases.
It’s quite easy for an experienced trader to analyze and predict how a single event may influence the market. However, analysis of several events, which may influence the market in completely different ways, is a very complicated and time-consuming process. This may be the reason why only approximately 20% of traders use fundamental analysis as their main forecasting tool.
Fundamental approach to Forex market analysis, unlike technical one, covers not only the prices and their changes, but the reasons for these changes as well. Each approach has its followers, advantages and disadvantages.