Fundamental Analysis

Understand the economic forces that drive markets and learn to interpret macro-economic data to make better decisions.

Importance of Fundamental Analysis

  • • Determines long-term market direction
  • • Explains major price movements
  • • Helps anticipate monetary policy changes
  • • Essential for position and swing trading
Section 1

What is Fundamental Analysis

Fundamental analysis evaluates the intrinsic value of an asset by examining economic, financial and qualitative factors.

Differences by Market

forex:Focus on country economies and monetary policies
actions:Focus on company financial health
crypto:Focus on adoption, technology and regulation

Why It's Important

  • Understand long-term movements
  • Identify undervalued/overvalued assets
  • Anticipate trend changes
  • Make informed decisions
Section 2

Major Economic Indicators

📊 Employment Indicators

NFP (Non-Farm Payrolls)

  • Frequency: Monthly (1st Friday)
  • Impact: Very high on USD
  • Interpretation: Rise = USD ↑, Fall = USD ↓

Unemployment Rate

  • Name: Unemployment Rate
  • Target: < 5% considered healthy
  • Impact: Medium to high

📈 Growth Indicators

GDP

  • Name: Gross Domestic Product
  • Frequency: Quarterly
  • Versions: Preliminary, Revised, Final
  • Interpretation: > 2% = healthy growth

PMI

  • Name: Purchasing Managers Index
  • Threshold: 50 (expansion/contraction)
  • Types: Manufacturing, Services

💰 Inflation Indicators

CPI (Consumer Price Index)

  • Name: Consumer Price Index
  • Target: 2% annual (most central banks)
  • Impact: Influences interest rates
PPI:

Producer Price Index - producer-side inflation

PCE:

Personal Consumption Expenditures (Fed USA)

📊 Other Important Indicators

venteDetail:

Retail Sales - consumer health

confidence:

Consumer Confidence - sentiment

logement:

Housing Starts, Building Permits

tradeBalance:

Trade Balance (exports - imports)

Section 3

Monetary Policy and Central Banks

🏛️ Major Central Banks

Federal Reserve (FED)

  • Country: Federal Reserve (USA)
  • Meetings: 8 times/year (FOMC)
  • Tools: Federal funds rate, QE/QT, Forward guidance

BCE

  • Name: European Central Bank
  • Currency: EUR
  • Particularity: Manages 20 countries
BOJ

Bank of Japan

BOE

Bank of England

SNB

Swiss National Bank

BOC

Bank of Canada

RBA

Reserve Bank of Australia

🔧 Monetary Policy Tools

Interest Rates

  • Rise (Hawkish): Hawkish (hawk) = currency ↑
  • Cut (Dovish): Dovish (dove) = currency ↓
  • Impact: Affects carry trade and capital flows

Quantitative Easing (QE)

  • Name: Quantitative Easing
  • Effect: Liquidity injection = currency ↓
  • Inverse: QT (Tightening) = currency ↑

Communication

  • minutes: Detailed meeting minutes
  • dotPlot: Fed members projections
  • conferences: Central bank presidents speeches
Section 4

Fundamental Analysis of Stocks

📊 Financial Indicators

revenue

  • • Revenue
  • • YoY Growth
  • • Recurring revenue

profitability

  • • Gross margin
  • • Operating margin
  • • Net margin

returns

  • • ROE (Return on Equity)
  • • ROA (Return on Assets)
  • • ROIC

strength

  • • Debt/Equity
  • • Current ratio
  • • Quick ratio

💵 Valuation Ratios

P/E Ratio

  • Name: Price to Earnings
  • Interpretation: < 15 value, 15-25 normal, > 25 growth
  • Variant: Forward PE (forward-looking)
PB:

Price to Book - for banks/insurance

PS:

Price to Sales - for companies without profit

PEG:

PE/Growth - valuation vs growth

EV:

Enterprise Value / EBITDA

🎯 Qualitative Factors

  • management:

    Quality and track record of the team

  • moat:

    Sustainable competitive advantage

  • sector:

    Sector growth and cycles

  • risks:

    Regulation, competition, disruption

📈 Earnings

  • calendar:

    Quarterly publication

  • elements:

    EPS (Earnings Per Share), Revenue, Guidance

  • reaction:

    Beat/Miss vs analyst consensus

Section 5

Using the Economic Calendar

📅 Calendar Structure

Typical Columns

Date/TimeCurrencyImpactEventForecastPreviousActual

Impact Levels

High impact - strong volatility expected
Medium impact - moderate volatility
Low impact - little movement

⏰ Timing

  • preparation:

    Analyze 30min before announcement

  • execution:

    Avoid trading during announcement

  • reaction:

    Wait for stabilization (5-15min)

🌐 Reliable Sources

  • Forex Factory - very comprehensive
  • Investing.com - multi-asset
  • DailyFX - forex focus
  • TradingEconomics - historical data

📊 Trading Strategy

  • high Impact:Close positions or widen stops
  • consensus:Anticipate if strong consensus
  • deviation:Trade on large deviation vs forecast
Section 6

Market Sentiment

📊 Sentiment Indicators

VIX

  • name: Volatility Index
  • interpretation: < 20 calm, > 30 fear
  • usage: Market fear gauge

COT

  • name: Commitment of Traders
  • info: Institutional positions
  • publication: Weekly (Friday)

PUTCALL

Put/Call ratio - options sentiment

FLUX

Fund flows - ETF inflows/outflows

📈 Risk-On

Favored assets:
  • • Stocks
  • • Emerging currencies
  • • Commodities
Signs:
  • • Low VIX
  • • Rising yields
  • • USD/JPY ↑

📉 Risk-Off

Safe haven assets:
  • • Bonds
  • • JPY
  • • CHF
  • • Gold
Signs:
  • • High VIX
  • • Flight to quality
  • • Widened spreads
Section 7

Inter-market Correlations

💱 Forex Correlations

Currencies and Commodities

AUD:

Correlated with commodities (iron, coal)

CAD:

Correlated with oil

NZD:

Correlated with agricultural products

CHF:

Inverse correlation with risk

Yields:

Interest rate differential = currency direction

📈 Indices

  • DXY:

    Dollar Index - inverse with EUR/USD

  • S&P vs VIX:

    Inverse correlation

  • Nikkei vs USD/JPY:

    Positive correlation

🏆 Commodities

Gold

  • safehaven: Rises during uncertainty periods
  • dollar: Inverse correlation with USD
  • inflation: Protection against inflation

Oil

  • currencies: Impact CAD, NOK, RUB
  • inflation: Rise = inflationary pressures
Section 8

Geopolitical Events and Crises

🗳️ Types of Events

elections

impact:Uncertainty = volatility
examples:
  • • US Elections
  • • Brexit
  • • European elections
trading:Reduce exposure before results

wars

effects:
  • • Flight to safety
  • • Commodities rise
  • • FX volatility
safehaven:
  • • CHF
  • • JPY
  • • Gold
  • • US Bonds

crises

financial:2008, COVID-19, SVB 2023
reactions:Central bank intervention

🛡️ Crisis Management

Preparation

  • • Major events calendar
  • • Contingency plans
  • • Guaranteed stops if available

Execution

  • • Reduce leverage
  • • Diversify
  • • Hedging with options
Section 9

Integration into Your Trading

🎯 Trading Approaches

pure

100% fundamental trading (long term)

mixte

Fundamental for direction, technical for timing

macro

Global macro - broad economic themes

news

Trading on economic announcements

⚙️ Trading Process

Analysis

  1. 1Evaluate macro context
  2. 2Identify catalysts
  3. 3Determine directional bias
  4. 4Time with technical analysis

Execution

  1. 1Position size according to conviction
  2. 2Stops based on thesis invalidation
  3. 3Targets on fundamental levels

❌ Mistakes to Avoid

  • Ignore fundamental context
  • Trade against central banks
  • Over-react to news
  • Neglect economic calendar
  • Forget correlations

✅ Practical Tips

  • Follow news daily
  • Understand market narratives
  • Anticipate rather than react
  • Patience for quality setups

📚 Recommended Resources

Websites

  • • Forex Factory - Calendar and forums
  • • TradingEconomics - Macro data
  • • Fed Reserve - FOMC publications
  • • ECB.europa.eu - ECB policy

Tools

  • • Real-time economic calendar
  • • Fundamental screener
  • • Correlation calculator
  • • Live news feeds

Important Warning

The information presented on this page is provided for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or trading incentives. Trading carries significant risks of financial losses. Past performance is not indicative of future results. We strongly encourage you to properly educate yourself, practice on a demo account, and never invest more than you can afford to lose. Consult a professional financial advisor before making any investment decision.

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