There are three major forms of market analysis. The professional traders in United Kingdom always use technical, fundamental and sentiment analysis to find the best possible trades. They never rely on a certain type of market analysis to make a profit in this market. They know how important the three main forms of market analysis is. Unlike them, rookie investors start trading the market with technical data. Though they can find some good trades, in the long run, they find it hard to make a consistent profit. So, it should be clear to you that without having enough knowledge of the fundamental analysis, it’s impossible to make a profit from this market.
There is a misconception among traders that learning fundamental analysis is a very hard task. However, if you follow the tips of this article, it won’t take much time to develop your skills and master the art of fundamental analysis. Let’s dive into the detail.
Table of Contents
Learn the impact of news
You need to learn the impact of news before you start analyzing the market data. Open a demo account with high-end broker Saxo and see how the market reacts to different news. Within a few weeks, you will understand that all news is not important since it can’t impose a heavy impact on the major asset. Based on the severity of the news, you can divide them into three classes. Low impact news doesn’t have any visible impact on the price of a certain asset. Medium impact news has a short term visible impact on the trading asset but this doesn’t give any favorable profit-taking opportunity. When it comes to high impact news, it can even change the trend of the market. So learn to analyze the high impact news to become good at fundamental analysis.
Analyzing the high impact news
If you learn to analyze the high impact news, it will be really easy to execute the trades in the Forex trading account. You can also sign up for a free trial so that you understand the importance of premium trading environment. Unless you learn to do so, you won’t be able to secure big profits during the major news release. Think about the NFP, employment claims, ECB press conference, etc. to improve your trade execution process. Instead of thinking about the complicated market terms, try to focus on the bigger picture of this market. Focus on the long term goals and see how the market reacts to such news. Use the demo account and try to trade such a volatile market. Things might be hard and you might lose most of the trades in the demo account but this is normal. Learn from the losing trades and try to improve your skills over time.
Learning to improvise
If you learn to analyze the major news, you will have the unique ability to improvise. Improvisation is a very big skill for retail traders. Most naïve traders fail to make a profit because they don’t know how to improvise. Improvisation is one of the most effective ways to protect your trading capital. Look at the bigger picture and try to find the key reason for which the price of a certain asset is trending higher or lower. Once you learn to analyze such major news, it won’t be tough to make a big profit from this market. Think about the bigger picture and try to develop your skills as a fulltime trader.
Develop a trading strategy
Based on your fundamental analysis skills, you need to develop a unique trading strategy. Naive traders always use technical data to place a trade. However, by doing so they are risking a big sum of money. If you want to save your trading capital you must learn the three main forms of market analysis. Based on those, you have to develop a perfect trading method that will help you to deal with the complex price movement with a high degree of accuracy.