Why you should improve your fundamental analysis skills

Do you know what sophisticated and more trendy investors look at while trading? It is the fundamental news event. Although most investors look at the technical analysis, the role of using fundamental analysis to understand the market sentiments is equally important. If you want to get one of the best tips in the trading industry, then you should know that you can easily increase your success rate by analyzing fundamental events.

Many of you are already aware that in terms of predicting the price movements and volatility, there are two types of analysis, one is technical analysis while the other is fundamental analysis. Technical analysis is a more theoretical approach for predicting the market. Several protocols are used in the technical studies of an investor. For example, financial charts, support, and resistance, trend drawing tools, price averages, etc. are considered as technical tools that investors in Singapore uses to find the trade setup.

On the other hand, fundamental analysis is more practical information that can change the market. These vary in nature and their influence over the market can never be predicted beforehand. Sometimes a big news release might not have a huge impact while sometimes, small news releases might have the capacity to shake the market from the core. That’s why it is important to take a look at the fundamental events to have a better understanding of the investment market.

How does it affect the market?

It is not unknown to anyone that the investment market is heavily influenced by supply and demand. When the supply of any commodity increases, its demand decreases due to its availability. However, when there’s a shortage in supply, the demand ultimately decreases. When the demand for something is more, it means people are more eager to get that stuff, and taking advantage of that sentiment the price is set at a higher level. As a result, we can say an increase in demand triggers the price of a commodity to go higher. However, what initiates such changes in the price of commodities? There comes the role of fundamental analysis in trading. Several factors work behind the sense to cause an imbalance in supply and demand.

Let’s say that a disaster interrupted the production of agricultural goods and thus resulted in famine. As a result, due to the breakout of famine, the economy of that country faced a huge hindrance. For that reason, the economic indicators indicating the economic conditions of that country also went down. Observing this data, investors concluded that it would not be profitable for them to invest in that particular currency.

Since the investors are not interested, the demand will decrease and it will ultimately lead to a decrease in the value of that currency. That’s how fundamental events play a role in the trading platforms. As a new ETF trader, try visiting the link and enhance your skills. When you have in-depth knowledge of the market, analysing the fundamental data will become much easier.

Economic indicators

Now, if you had no idea of the economic indicators, you might not be able to invest profitably. Investing in a failing deal only means losing money in the end. But fundamental analysis saves you from facing that catastrophe. Technical analysis is good. It shows you the levels of trading entrance and exit points. But what do you do when you are looking for market reversals or breakouts? Technical analysis only shows you the numbers that have come up in the past. But the market doesn’t always follow the numbers. It is often controlled by the sentiments of investors and you can only know about it by analyzing the fundamental events.

However, though these events have a significant impact on the trading market, it doesn’t mean you will completely focus on the news analysis. Rather your area of concentration should be on the market and you should focus more on the market analysis than on news events themselves.