Successful trading in financial markets and a peculiar one like online foreign exchange market requires propereducation, patience, skill set to carefully follow the rules, manage risk and also make informed decisions. I would like to delve into Fundamental Analysis. My ownresearch has helped me discover that a good percentage ofsuccessful traders which consists of less than 10% of the whole market makes informed decision. One of the tools they apply is fundamental analysis even though they combine it with other forms of trading tools.

We will not argue of which is best between Fundamental and Technical trading. Nonetheless, can examine how best we can synchronize them into achieving trading success and be consistently profitable.

Fundamental analysis in the foreign exchange market could be said to be voluminous or intimidating unlike the use of simple technical indicators to determine entry and exit. This can be used as an alternative to reading in between the lines of press statements of the central banks governors or news releases to make trading decisions.

It is of note that there are also some very complextechnical analysis strategies such as the Neural network based strategy, The Elliott wave strategy and many more. My point here is that to be successful at anything it re-quires both the investment of time and effort into developing oneself.

That been said, a lot of novice traders mix Newstrading and Fundamental analysis to be same and I would like to clear that myth because they are two different things totally. News trading is when you take advantage of thesurprise factor in data releases as it is primarily based on the psychology and market perception.This is done by comparing the actual releases to the forecast at the time which may not consider previous releases except theirs is a huge variation in the revisions of previous data. However, Fundamental Analysis takes into consideration the overall outlook of economy based on its economicindicators (such as Employment, PMI, CPI, GDP, TradeBalance, etc...), monetary policy, and other breaking news that affects the long term value of the currency.

Fundamental analysis starts comparison from previous releases and a better than prior release figure is usuallyconsidered positive, regardless of the forecast figure.It focus more on the medium to long term outlook of thecurrency as I think of it a GRAVITY, it's always there. Market may be driven by other temporary factors, but it will eventually fall back in the direction of fundamentals.

It should also be noted that Fundamental analysis doesn't suddenly change without evident change in economic data releases and markets sentiments.

Written by Soneye Bolaji