Forex Fundamental Analysis
What does fundamental analysis mean?
Fundamental analysis in Forex is a type of market analysis which involves studying of the economic situation of countries to trade currencies more effectively.
It gives you information on how the big political and economical events influence the Forex market. Figures and statements which are given in speeches by important politicians and economists are known among the traders as economical announcements that have great impact on currency market moves. In particular, announcements related to United States economy and politics are the primary to keep an eye on.
What is the economic calendar?
The economic calendar is created by economists where they predict different economics figures and values according to previous months. It contains the following data:
Date - Time - Currency - Data Released - Actual - Forecast - Previous
For example: If the forecast is better than the previous figure, then US dollar usually is going to strengthen against other currencies.
But when news are due, you should check the actual data.
How to read the economic calendar:
The impact factor suggests how much influence current economic data is expected to bring along.
It is important to know the time of High impact data release if you trade affected currency pair.
During actual news release market becomes volatile. The strength of the volatility depends on the "factor of surprise" brought in the news.
The "factor of surprise" can be defined as a level of unexpectedness, where traders compare Forecast data to actually released data.
Medium impact economic data should also be kept in mind in case the factor of surprise turns to be high. Low impact data most of the time do not shift Forex market significantly.
Column Previous in Forex Calendar provides data from last release.
Column Forecast indicates the numbers that economists are predicting and expecting for the upcoming release today.
Column Actual is updated only after the data is out. At the very second when data becomes available it is instantly compared against Forecast values, and depending on overall positiveness or negativeness of the news for the currency plus taking into consideration the factor of surprise, price dips or rises in a matter of seconds.
The economic News impact - increased market volatility - usually lasts for 1-3 minutes (highest volatility); next 5-10 minutes market experiences corrective/adaptive volatility, where price settles in summarizing new market shift.
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