1.) Introduction 2.) Economic and Financial Factors 3.) Political Factors
Introduction
Fundamental analysis is the review of political and economic news and data which can affect the intrinsic value of financial products. Fundamental economic factors can include the release of economic data such as unemployment or housing sales figures. Geo-Political tensions such as confrontation in the Middle East can also affect the value of financial instruments, whether they be equities, foreign exchange, bonds or commodities.
--- Within the current economic climate, where boundaries continue to get broken, we have seen the frequency of major market moves as a result of changes in fundamental economic factors increase significantly. ---
At Amplify we recognise that technical trading strategies used in ranging or trending markets are not appropriate when fundamental drivers create rapid short term price fluctuation. An example of a fundamental move can be seen in the chart video below showing how the US stock index S&P 500 remained in a technical range during the early part of the morning session and then subsequently reacted to news that Bank of America needed further support from the U.S. government.
Although fundamental trading opportunities are generally less frequent than day to day technical strategies, if traded correctly they can provide extraordinary intra-day results that can provide a solid profit base on which to build. It is crucial to understand the significance of fundamental factors and how they can affect the product you trade. A full list of data releases relevant to fundamental economic analysis can be found in our Figures to Watch page.