Fundamental analysis

Although Forex trading can lead to very profitable results; there are substantial risk involved; exchange rate risk, interest risk, credit risk and event risk.

Fundamental analysis is a method of forecasting future price movements of a financial instrument based on economic, political environmental and other relevant factors, as well as data that would affect the basic supply and demand of whatever underlies the financial instrument. The fundamental analyst studies the causes of market movements, while the technical analyst studies the effect. Fundamental analyst is a macro, or strategic assessment of where a country should be traded, based on any criteria but the movement of the currency pair's itself. These criteria often include the economic conditions of the currency represents, monetary policies and other fundamental elements. Many profitable trades are made moment prior to, or shortly after, major economic announcements.