Fundamental analysis is a way of looking at the forex market by analyzing economic, social, and political forces that may affect currency prices.

1. Fundamental Analysis
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2. Fundamental Analysis
Fundamental Analysis is a broad term that describes the act of
trading based purely on global aspects that influence supply and
demand of currencies, commodities, and equities. Many traders will
use both fundamental and technical methods to determine when
and where to place trades, but they also tend to favor one over the
other.
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3. Central banks are likely one of the most volatile sources for
fundamental trading. They can raise interest rates, lower them (even
into negative territory), keep them the same. Fundamental analysis of
central banks is often a process of poring through statements and
speeches by central bankers.
Central Banks

4. Trading economic releases can be unpredictable, writes John Defterios,
founder and CEO of Defterio Capital. The trick to trading the fundamental
aspect of economic releases is to determine when you want to make your
commitment, he says. If you trade well before the release, you can try to take
advantage of the flow toward the consensus expectation.
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Economic Releases

5. Conflicts or wars can have an adverse impact on tradable
goods by changing the supply or even the demand for certain
products. Increased conflict in the Middle East can put a strain
on the supply of oil which then makes the price increase. Being
able to properly predict how these events will conclude may be
a way to get ahead of the market.
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Geopolitical Tensions

6. There are other seasonal factors that aren't related to weather
as well. For instance, at the end of the calendar year, many
investors sell equities that have declined throughout the year to
claim capital losses on their taxes. Investors typically come back
to equities in droves in January, a phenomenon called "The
January Effect" Businesses that sell products in multiple nations
look to offset their currency hedges.
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Seasonality

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Conclusion:
Some fundamental factors are more long-lasting while others
are more immediate, but trading them can be rewarding. The
fundamental factors listed above are just the start to a list that
is much longer in length as new fundamental methods of
trading are created every day.

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