The biggest part of fundamental analysis is the financial statement analysis which is also known as quantitative analysis. What do you do here? You look at historical performance date so that you can estimate the future performance of stocks. Those who follow this process of analyzing gathers as much data as they can find on revenue, expenses, assets, liabilities and everything else about the financial aspects of a company. The fundamental analysist look at this info so that they can gain insight on a company’s future performance. Afterall, this is what fundamental analysis is all about – focusing on the patterns, trends in order to determine a company’s potential future growth.
Hmm… I think Forex is a bit different… to say the least.
Forex is different, and I think Fundamental Analysis belongs to stock trading, not forex.
Sounds like fundamental analysis deals more of accounting aspect to take the historical performance data… it is still looking at a pattern…
Seems you are right, fundamental analysis is more like accounting
Welcome to the forum, Angelo
Hey, I am an accounting graduate, seems like fundamental analysis is not really new to me, that’s why
In forex, the macroeconomics are part this analysis, not elements of analysis of the enterprise.
I believe that fundamental analysis cannot give comprehensive guide on forex investment decision
Fundamental analysis can give you insight into the direction of currency pairs. However, I believe that perhaps you are looking at fundamental analysis from a equity perspective and failing to apply it to Forex. In performing fundamental analysis on equities indeed you must look at the company’s financial history and future prospects for growth. In Forex you must think that each nation is a “company” and you use indicators like unemployment, inflation, GDP, interest rate differentials between government bonds to determine the health of the nation and it’s future prospects for growth or decline or subsequently currency strength or weakness. It is in my own opinion that long term forex trends do not develop because of technical analysis reasons. On the contrary currency trends develop because of a change in nations prospects for growth or lack thereof. Whereas technical analysis will help with the timing of entering into and out of the market fundamental analysis helps you determine the direction of the wind. Much like sailing or surfing you can only go so far with the wind or wave in your face, but when technical indicators and fundamental indicators line up to form the same picture you often have the recipe for a very powerful move.
Thank you very much for throwing more light. This is a wonderful community.