Along your travels, you’ve undoubtedly come across Gulliver, Frodo, and the topic of fundamental analysis.
Wait a minute…
We’ve already given you a teaser about fundamental analysis during Kindergarten!
Now let’s get to the nitty-gritty!
What is it exactly and will I need to use it? Well, fundamental analysis is the study of fundamentals!
That was easy, wasn’t it? Ha! Gotcha!
There’s really more to it than that.
So much more.
Whenever you hear people mention fundamentals, they’re talking about the economic fundamentals of a currency’s host country.
Economic fundamentals cover a vast collection of information – whether in the form of economic, political, or environmental reports, data, announcements, or events.
Even a credit rating downgrade qualifies as fundamental data.
Fundamental analysis is the use and study of these factors.
It is the study of what’s going on in the world and around us, economically and financially speaking.
It tends to focus on how macroeconomic elements (such as the growth of the economy, inflation, and unemployment) affect whatever we’re trading.