 |
| Fundamental Analysis |
What is the Fundamental Analysis?
Hello to all, in this article, we will present an introduction to the basics of Fundamental Analysis. Hopefully, our compass is working correctly. As known to investors and those interested in the investment world, there are two main methods through which markets can be analyzed. One is Technical Analysis, and the other is commonly known as Fundamental Analysis. Both are widely used and practical. Fundamental analysis examines the economic, political and other factors that influence the market's condition and predict its future direction. It is crucial to understand how these factors are utilized in stock and currency pair trading and their impact on price levels. Fundamental analysts focus on Macro and Microeconomic indicators. From a fundamental analysis perspective, market players can be divided into two categories: Forex and Stock Traders.
 |
| Economic Calendar Data |
The Fundamental Analysis for Forex Traders
1.Forex Traders.📈 Forex traders who trade through
currency pairs in the Forex market examine data from macroeconomic indicators
and follow the indicators published in the📅 economic calendar. When trading,
forex investors attempt to understand market movements by using fundamental
analysis methods. Fundamental analysis takes into account not only economic
indicators but also considers that political and social events can impact the
forex Forex markets.
Inflation is an important factor for forex investors. High
inflation can lead to the depreciation of a country's currency💶 and poses risks
for investors. Therefore, it is crucial to monitor inflation rates and predict
possible changes in the future. Interest rates are also a factor to consider in
the Forex markets. Changes in a country's interest rates affect the interest of
investors in that country's currency. High interest rates usually become
attractive to investors, while low interest rates can lead to capital outflows. 🛒Retail sales is one of the economic indicators. This indicator reflects
consumer spending and the overall health of the economy. Strong retail sales
data indicates a robust economy and has a positive impact on the currency.
Employment data, including the unemployment rate and employment levels,
provides information about the overall performance of the economy. Low
unemployment rates and increasing employment support economic growth and the
value of the currency.
In addition to that, forex traders also follow news events.
Events such as central bank presidents' statements, changes in monetary
policies and government reshuffling can cause market fluctuations. For
instance, an announcement of an increase or decrease in interest rates by the
central bank can have a significant impact on the currency. When analyzing such
news, investors try to anticipate how the market may react and adjust their
trading strategies accordingly.
 |
| Fundamental Analysis for Traders |
The Fundamental Analysis for Stock Traders
2.Stock Traders.📊 Investors trading stocks in the stock market
need to delve deeper into both macro and microeconomic indicators. A stock
trader relies partially on macroeconomic and fundamental data. By analyzing the
company's earnings reports, traders establish their expectations. 📃These reports
encompass the company's revenues, expenses, profits, growth potential and
other crucial financial indicators. Earnings report seasons, which occur four
times a year, hold significant importance for investors. During these periods, companies
share their financial results with the public, providing an opportunity for
analysts to assess whether they meet expectations. 📜Earnings reports often
contain vital clues about the company's performance, potentially leading to
significant fluctuations in stock prices.
Trading based on earnings reports presents opportunities for
investors. Following the release of these reports, stock prices can
significantly increase or decrease. This offers the potential for quick profits
but also carries high risk. Investors should carefully analyze the financial
data in the reports, along with the company's growth strategies, market share,
competitive position and future expectations. Earnings reports not only focus
on disclosed financial data but also include information about the company's
management and business strategy. Statements from the company's CEO, future
projects, new product launches, or strategic partnerships should be considered
alongside the reports. Such information provides investors with a more comprehensive
view of the company's future performance. Traders should not only track their
earnings reports but also market news and general economic conditions. Factors
such as economic indicators, interest rates, political events, and
international developments also affect stock prices.
There are two different approaches used in research and data
analysis processes in financial markets. These are as follows:
Quantitative analysis and Qualitative analysis.
 |
| Quantitative Analysis |
Quantitative Analysis:
📊In forex and stock markets, quantitative analysis is
generally more commonly used. This type of analysis is conducted based on
numerical data, such as economic data, financial indicators, technical analysis
tools, and statistical calculations. For example: analyzing economic indicators,
examining company financial reports, using charts and technical analysis tools
are all part of quantitative analysis. Quantitative analysis is used to predict
price movements, identify trends, and determine entry/exit points.
 |
| Qualitative Analysis |
Qualitative Analysis:
To a somewhat limited extent, qualitative analysis can be
used in forex and stock markets. Qualitative analysis is used by investors to
conduct fundamental analysis of companies, interpret news, evaluate management
statements, and understand emotional reactions in the overall market. For
example: conducting interviews with company executives, interpreting news, or
performing sector analyses can be part of qualitative analysis. Qualitative
analysis is used to provide investors with a broad overview, understand the
fundamental values of companies, and consider emotional factors in the
decision-making process.
Fundamental analysis encompasses various factors used to
analyze assets such as stocks or currency pairs. Traders can consider the
following key factors by utilizing fundamental analysis:
📰Special News: Central Bank Announcements (interest
rates, monetary policy, and others), Geopolitical Developments (natural
disasters, wars, terrorist attacks, and others), Economic Policy Changes (tax
reforms, fiscal incentives, trade agreements and others).
🛈Economic Data: Trade Balance, Gross Domestic Product
(GDP), Inflation Rates, Employment Data, Industrial Production, Consumer Price Index (CPI), Retail Sales and others.
🛢Sector Trends: Market Growth Potential, Competitive Environment,
Technological Innovations and others.
💰Earnings Reports: Revenue and Profitability,
Expectations and Guidance, Financial Condition and other reports.
The above list is provided as a general overview, and in
reality, there are many more factors included in the list. Ultimately, Forex
and stock market investors utilize fundamental analysis methods to analyze
economic indicators, political events, and news. These analyses help traders
understand market trends and make more informed trades. However, the market is
a constantly changing environment, and traders must always adapt to new
situations and update their strategies.