The Forex market is flourishing gradually, and thousands of investors are showing their interest in every month to this giant market place. Making a handsome living is really possible in the Forex market, but for this, a great deal of study and research is needed.
Beginners rush into the ETF trading business by listening about a great amount of earning but drop out when they fail to make the profit after the investment. To show you a holistic path today, we will discuss the ways of conducting the research using the fundamental analysis method.
Process of fundamental analysis:
1. Economic approach
An investor must research on the global economic condition at the present time if he wants to understand the trend beforehand. We should choose the currency pairs based on the Gross Domestic Product or GDP of the countries. If a country has a lower unemployment rate, the value of the currency increases and we should try to find the currencies like these to conduct our Forex trading.
If an economy is not well-off, the currency of that country will not provide us with the expected value, as it can change any time. Experts choose currencies such as Dollars or Euros as their base trading currency as they have enough financial strength.
During the pandemic, most of the countries have faced a great economic decrease, and the situation has affected the ETF market to a great extent too. Beginners should be conscious of buying the financial instruments at this moment as they get the hit of the sudden bearish market at any time. This type of financial research helps to draw the actual picture of the trading business in the current position. Most newbies are not aware of the proper way to research or do not bother to conduct a good study, which makes them vulnerable to a great loss in the near future. You can expand your fundamental knowledge by visiting https://www.home.saxo/en-sg/products/etf. By reading premium articles from elite traders, you will be able to build up your confidence and slowly know the core art of trading.
2. Political approach
Because of political issues, the economy takes a vital change which also places a great impact on the FX market. The presidential election of the United States is considered one of the major political events in the world, which plays a great effect on the business of the countries. It happens as the dollar is the most used currency worldwide, and the export-import sector of the world is greatly related to the trade-related legislations of the US.
Because of the racial and political movement, the entire financial situation takes the worse condition gradually, which affect the FX market condition passively. During the reign of ex-president Donald Trump, neighboring country Mexico was in a stuck from the trade-related facilities of the US. We can also recall the autocratic law enforcement against the Chinese mobile company Huawei during the reign of this remarkable president of the US. All these caused a significant change in the market, which affected the trading on the Forex too.
3. Social approach
Investors should measure the socio-economic situation of the countries too. Cultural clashes can decrease the financial growth of a country. Countries of Asia are most prone to the riots which place a bad impact on the trend as the traders from the Asian countries become unable to buy the financial instrument because of the massive financial change in their currencies. Newbies must be conscious of these types of social issues to predict the trend perfectly.
At the bottom line, it can be said that fundamental analysis plays a significant role to execute the trades successfully. Even technical chart depends on the indicators which take decision based on the deep algorithmic research executed based on financial events. Experts place so much emphasis on the fundamental analysis because it sometimes provides the best forecast for the technical research.