Fundamental analysis in Forex

The Forex market is extremely volatile. No one can say for certain that can find the profitable trade signals in the market. The professional traders are using technical and fundamental analysis to find the best probable spot to execute the trades. Usually, the technical analysis is done by analyzing the charts in the trading platform and the fundamental analysis involves assessment of the economic news. Some novice traders ignore the importance of fundamental analysis and mess things up in the trading profession.

To become good at trading, you must learn to analyze the news factors like a pro trader. In this article, we are going to discuss some of the key reasons for which you must learn to analyze the fundamental data.

Cause of market volatility

Do you know the key reason for which the market becomes volatile all of a sudden? Can you tell us why we see a sudden change in the trend? If you have answers to these questions, probably you know the importance of fundamental analysis. Fundamental factors are often considered as the most powerful price-driving catalyst in the Forex market.

Even though the retail Forex trading profession in Australia is extremely popular, very few traders know the importance of fundamental analysis. Without knowing about the high-impact news release, you will never find peace in your trading profession. Learn to analyze the news data as it will help you to predict the intensity of the market volatility.

Low and medium impact news

Some retail traders often say the medium and low impact news has no severe impact on the market. But if you carefully assess the technical data during the news release of the producer price index, you will see a slight change in the Forex market volume. This means, there will be a shift in the market certain for a specific pair related to that news.

For instance, if PPI news is released for the U.S economy, you should see the shift in market sentiment in the major currency pairs only. This suggests that the big players have considered this data and have taken proper steps to deal with the change in the economy. If the big players pay attention to the low and medium impact news, you should do the same in the retail trading profession.

Predicting the change in a trend

Very few traders have the technical skills to predict the change in the major trend. Most people rely on technical data and eventually spot the major reversal with a significant delay. But if you learn to analyze high-impact news, you should be able to relate it with the technical data.

For instance, a technical trader can say that the bearish reversal in the market has been taken only if the price breaks the neckline of the head and shoulder chart pattern. But those who have strong fundamental analysis skills can easily predict that the neckline will be broken as the news is suggesting a bearish movement for a particular asset. So, learn to blend technical and fundamental data as it will give you a better picture of the market.

Securing big profit

Do you want to make big profits from a single trade? Do you want to enjoy a fast-paced trading environment? If so, you need to learn about the news trading process. Many novice traders often think that news trading is nothing but a waste of time and money. But if you have a look at the institutional traders, you will be surprised to see that they often scalp the market during the busiest hours of the market. They take advantage of the high-impact news and secure big profits within a short time. If you want to do the same, you must learn to analyze the news data very precisely. Once you become good at it, you can also trade high-impact news with strong confidence.