In this is the first of two lessons on fundamental analysis. Fundamental analysis entails many different aspects, but usually people are referring to economic fundamentals, and often simply meaning economic reports. Economic reports are like the tests a doctor runs on you when you go in for a check up. Economic reports measure the health of a country, much like a blood pressure test measure’s the health of your cardio vascular system.
Analysis of economic SHOULD provide insight into how price action may react to a certain economic event. I emphasize the word should because things don’t always go the way they should, or rather the way you think they should . Often there is so much speculation before an economic report is released that price will react hours before the actual event. When the report is actually released the market is so exhausted that nothing happens. Also, sometimes a report will come out with data that might seem positive for a countries economy but price goes in the opposite direction then expected. Fundamentals offer a wacky world of analysis and it takes alot of time to become a good analyst. The main reports to pay attention too especially when starting out include: PPI GDP Non Farm Payrolls(any employment numbers) and Interest rate decisions. Most trading platforms come with an economic calendar plugged in, it would be a good idea to atleast note on your chart when a event is released so you can stay out of the way if you don’t intend on trading it.