In order to maximise gains and reduce losses, traders typically turn to fundamental, technical and sentiment analysis. While fundamental analysis tells traders about intrinsic market values, technical analysis relies on past performance of a financial instrument. The third branch, sentiment analysis, is used to determine the general attitude of traders, which shapes the overall market mood, within a specific timeframe.
Of course, there’s no absolute way to tell which way the markets will go – and due to high volatility, losses are always a possibility. But, it helps to do your research.
When it comes to forex trading, fundamental analysis is all about examining factors that could have an effect on currency prices. A lot depends on the central bank released by them. Interest rate hikes could increase the value of a currency over the long-term. Other factors, such as GDP, inflation rate, production growth, NFP releases, and so on hold importance for commodity traders as well. The aim is to identify which economy is booming and which isn’t. The day-to-day news releases are important for fundamental traders.