Basics

Understanding Fundamental Analysis


There are two very important aspects of economy that everyone needs to know. One we call real economy. It is the daily aspects of our life, as if we have or not a job, If the amount of money we earn is enough to pay our bills.

If you are a company, this real economy is how much you sell and the amount of its investments.

The second important aspect of the economy is called monetary. It means that is all about money. This happens into the financial world, like banks, trade companies, hedge operations and so on.

Those two worlds are relatively independent. The first believes it matter more at the end of the day. Because “we can’t eat money bills, or coins”. The other believes that price “knows” everything, in other words, once you see the price of something it already has in count all the aspects of the real economy.

The decision-making based on the real economy is called Fundamental Analysis. It brings to account all facts related to the history of assets, companies, countries, etc. It also looks upon indicators like inflation, GDP, exchange rate, new polices and international affairs. Everything that can influence the results in the real economy.

If you are willing to practice Fundamental Analysis

It is necessary to be aware of what’s happening in the market you want to play. The analogy is a parabolic antenna, receiving information from all sides.

You can think of two Fundamental Analysis as a good helper to see long periods ahead. It relies in a more resilient fabric, the history of events. I mean, if one country has a huge rupture in its credibility, it is unlikely it will have a strengthen in its currency vis-à-visother currencies more reliable.

For example, when Brazil discovered the pre-salt layer petroleum, the public national company shares soars. While the price of petroleum commodities falls.

The first came with a higher expectation that the company will make more profits. The second, because as a commodities petroleum decrease price once it is more abundant.

In the opposite direction, when Aramco company suffers a terrorist attack like it recently happened, the interruption in production makes the petroleum price rapidly increase. Partially because of expectations of scarcity, in part because there was uncertainty about the possible military response involving other countries in the region.

We are all about inform and educate

If you’re thinking about become a Fundamental Analyst than Wiseinvest have a role in your journey. We can provide educational and informational content necessary to make the right calls in the market. Even you have other sources of information we always can provide a second opinion.

What is more special is that if you don’t have the time or the technical skills to make this analysis than Wise trades are a perfect fit for you. It provides the proper information to you act in the right moment.

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  • Direction (long or short)
  • Position size (number of units or lots)
  • Take profit (price level to exit with maximum gain)
  • Stop loss (price level to exit with maximum loss)

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Takeaways

  • Fundamental Analysis is based on the real economy, it means the production of goods, services, investment and all aspects of our daily life.
  • If you want to practice Fundamental Analysis you must be well informed, with a broad source of information and standpoints.
  • If you don’t have the time or the skills to do it, then use the Artificial Intelligence Wise Signals to be always aware of the best market opportunities. Plus, subscribe to our newsletter to get better informed about finance and forex trading clicking here.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.