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Thread: What is the difference between a fundamental analysis on the stock market and the FX?

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    Super Moderator Gulfstream's Avatar
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    What is the difference between a fundamental analysis on the stock market and the FX?

    There are many significant techniques that determine the direction of movement of currencies and assets.
    Undoubtedly, fundamental analysis is one with the highest priority.

    The value of fundamental analysis is often underestimated or misunderstood by beginning traders.
    A lot of people believe that this type of analysis is useful only to investors or traders with long-term positions. However, it is not like this. If you know the basics and concepts of fundamental analysis, you have an opportunity to find the dynamics of financial markets, which are very important for the development of the trader, regardless of the role of
    fundamental analysis in daily trading.
    The fundamental analysis will be divided into 2 segments of the financial market: the currency and the stock market.

    I will try to cover as much as possible in detail by answering the questions:
    - What is the fundamental analysis and how does it affect the priority of movement?
    - What are the features of the fundamental analysis of the currency and stock market?


    And also I will try to disclose the basic methods of fundamental analysis for stocks, bonds, CFDs and other assets, which are represented on the stock market, with a phased disclosure of the sub-topics:
    - What factors influence the movement of an asset and the stock market as a whole?
    - How to evaluate correctly published news and reports for companies, whose shares are traded on the exchange?
    - Where and from what sources it is possible to receive information about the impact on the movement of an asset?

    When you trade on FX market, you should know the answers to the 2 basic questions:
    - what news you should consider the most important of those published in the news line / economic calendar;
    - how you should read the news and determine their impact on the movement of currency pairs and tradable assets;
    - what economic and political factors you can consider as significant ones for work in the FX market.


    In the segment of the fx market, I will present an assessment of the following fundamental factors according to their degree of influence:
    - macroeconomic statistics of countries-issuers of a particular currency and the largest economies of the world;
    - the results of the meetings of the world's largest Central Banks;
    - Specific factors that affect individual currencies.


    On the stock market, the influence of key fundamental factors:
    - corporate reports of companies;
    - sectoral statistics and forecasts;
    - macroeconomic statistics, especially in the largest economies of the world;
    - meetings of the world's largest Central Banks.


    A distinctive feature of the fundamental analysis of the stock and currency market is that the stock market analysis is conducted on a specific company, its activities and profitability are studied, basing on the published reporting data and company news, etc., along with the economic and political situation in the country.


    During analyzes of the foreign exchange market, the movement of currency pairs is investigated and forecasted. Since there are two currencies of different countries in one pair, the influence of both factors is considered. So, in dollar currency pairs, in which the dollar is quoted, first of all, the economic statistics of the USA and the second presented currency are studied, it is revealed - what news will be the most important and can significantly affect the movement of the currency pair in one direction or another.


    Reviews of the use of fundamental analysis techniques, as well as specific options for market reaction
    on those or other events will be presented on real graphs and examples.


    What is the fundamental analysis and how does it affect the priority of movement?
    Fundamental analysis is represented by methods of assessing and forecasting the forthcoming movement of financial markets and its specific instruments. These methods are based on macroeconomic, financial, production, industry and other data relating to a particular market or instrument.
    In other words, fundamental analysis is engaged in assessing the situation from the point of view of political, economic and financial-credit policy. Information on the interest rates of central banks, the economic course of the government, possible changes in the political life of the country, as well as various kinds of rumours and expectations are important in fundamental analysis.


    In practice to conduct fundamental analysis is not so simple. The same factors may have different market value in different conditions or may become decisive from insignificant ones.


    Thus, the success of a trader in conducting a fundamental analysis depends on an understanding of the laws of the financial market, the ability to compare absolutely unrelated events at first glance. Also, a fundamental analysis assumes knowledge of the general picture, specified by the published news only.
    The fundamental analysis allows us to assess the factors, that can affect the movement of exchange rates over a period of several days to several weeks.


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    Registered user Sascha's Avatar
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    Quote Originally Posted by Makaveli View Post
    I think the stock market is more moved by fundamentals, in such a way that you could wake up to a huge gap and that is not the same in forex trading, as the forex market is more of the bigger boys buying and selling. I thin in general terms, in the risk and all things about the two, I think forex risk can be well managed more better than the risk on stock and also forex can be traded with little account size.
    i heard and seen some theories from people i read from internet, they said that stock market has more stable movement to predict and most patterns in its chart works more accurate than in forex market. i can't confirm if this legit or not because i never participate to any stock trading and focus to my fundamental analysis with forex market alone.

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    Registered user layigold's Avatar
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    In stock market , you need to be kept abreast of the quarterly and monthly earning reports of the company whose shares you want to buy but when it comes to forex , you do not need anything if such . All you need in forex is to monitor the economic news on the calendar , the time each of those news is to take place and how market reacts to them . For you to trade any of those economic news successfully as well , there is need to master the art of fundamental analysis very well

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    Registered user Silhouette's Avatar
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    Quote Originally Posted by layigold View Post
    In stock market , you need to be kept abreast of the quarterly and monthly earning reports of the company whose shares you want to buy but when it comes to forex , you do not need anything if such . All you need in forex is to monitor the economic news on the calendar , the time each of those news is to take place and how market reacts to them . For you to trade any of those economic news successfully as well , there is need to master the art of fundamental analysis very well
    I take this as a new information about the differences between fundamental analysis with stock market and forex market. I thought from the beginning, that stock market was equal to forex but I was wrong and know this now. Necessary or not, I don't focus to stock market because I don't trade with them and focus only what's happening in forex market based on technical analysis alone. I respect how fundamental can work in market but still don't get the idea how to use it well.

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    Quote Originally Posted by Silhouette View Post
    I take this as a new information about the differences between fundamental analysis with stock market and forex market. I thought from the beginning, that stock market was equal to forex but I was wrong and know this now. Necessary or not, I don't focus to stock market because I don't trade with them and focus only what's happening in forex market based on technical analysis alone. I respect how fundamental can work in market but still don't get the idea how to use it well.
    I too dont trade stocks and only trades Forex and know some difference exist between fundamental and technical approach. Whatever approach we want to use, we should first learn it and practice it using the demo. Traders especially beginners who dont want to face big losses due to some mistakes needs to first use demo account. When we understand the correct ways of trading then we are capable for earning money in Forex.

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    Quote Originally Posted by Abhishekwala View Post
    I too dont trade stocks and only trades Forex and know some difference exist between fundamental and technical approach. Whatever approach we want to use, we should first learn it and practice it using the demo. Traders especially beginners who dont want to face big losses due to some mistakes needs to first use demo account. When we understand the correct ways of trading then we are capable for earning money in Forex.
    i think we should not concentrate on things which are useless here. here we can earn if we have experience so we should learn trade not should think about other things. we should trade properly for our learning first then we can earn good profit. good trading is possible if we learn it first but if we do not learn we can place wrong orders and can lose all in some time

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    Registered user Yayami's Avatar
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    Quote Originally Posted by altafch View Post
    i think we should not concentrate on things which are useless here. here we can earn if we have experience so we should learn trade not should think about other things. we should trade properly for our learning first then we can earn good profit. good trading is possible if we learn it first but if we do not learn we can place wrong orders and can lose all in some time
    maybe you called it useless because stock market isn't our concern and forex pairs is what we must focus all the time. that makes more sense because there are people who try to learn something they actually don't need but they insisted to do so which will result in wasting time and efforts. especially to those who trade with technical analysis, they don't really need to know how market works in fundamental because they already have their basics in trading.

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    Quote Originally Posted by Yayami View Post
    maybe you called it useless because stock market isn't our concern and forex pairs is what we must focus all the time. that makes more sense because there are people who try to learn something they actually don't need but they insisted to do so which will result in wasting time and efforts. especially to those who trade with technical analysis, they don't really need to know how market works in fundamental because they already have their basics in trading.
    Stock market is different from Forex but the approaches to analysis is broadly the same with both of them. Like in stock too we can trade using technical or fundamental analysis. Forex trading is a bit risky business, if we are not willing to learn and correct mistakes then we cannot avoid our balance becoming less due to losses. Actually with Forex we can earn unlimited amount but als lose an unlimited amount.

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    Registered user Silhouette's Avatar
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    Quote Originally Posted by AmitChallenger View Post
    Stock market is different from Forex but the approaches to analysis is broadly the same with both of them. Like in stock too we can trade using technical or fundamental analysis. Forex trading is a bit risky business, if we are not willing to learn and correct mistakes then we cannot avoid our balance becoming less due to losses. Actually with Forex we can earn unlimited amount but als lose an unlimited amount.
    Yet it's still far too be included as similar between stock and forex market. Fundamental analysis works and fully dependable to use for stock market while forex market is more flexible and sometimes not taking any news seriously only with small changes with the price. Stock market, by far I can tell from my knowledge that it has stable movement and easier to predict rather than forex. This is why many people are joining stock trading because forex trading is considerably riskier.

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    Quote Originally Posted by Yayami View Post
    maybe you called it useless because stock market isn't our concern and forex pairs is what we must focus all the time. that makes more sense because there are people who try to learn something they actually don't need but they insisted to do so which will result in wasting time and efforts. especially to those who trade with technical analysis, they don't really need to know how market works in fundamental because they already have their basics in trading.
    Yes when we are dealing in Forex market we have to obey the rules of Forex trading. FIrst thing is to trade based on a strategy that has been learned and practiced using a demo account. Always invest in forex after getting proper knowledge and training about it. Basically indicators cannot give profits we must have a strong understanding of them and about combining them with SOR levels.

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    Quote Originally Posted by komalam View Post
    Yes when we are dealing in Forex market we have to obey the rules of Forex trading. FIrst thing is to trade based on a strategy that has been learned and practiced using a demo account. Always invest in forex after getting proper knowledge and training about it. Basically indicators cannot give profits we must have a strong understanding of them and about combining them with SOR levels.
    we can use and can understand but still we can lose, this is based on future and in future anything can happen just our proper sl can limit our loss if we do not have sl into trading we can not survive for long, fundamental is bad way because news not have proper way to give us reason to buy or sell but we can use some technical which is good way to give us good signals

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