Judul konten
We understand how powerful knowledge can be when it comes to trading in the vast financial markets of today. It is the one thing that all successful traders have in common. You can think of it as the foundation upon which you build your fortress. It is with this solid foundation that you will be able to build the knowledge structures and trading habits that will contribute to your success as a trader. No matter your choice of financial market, trading vehicle or asset, having a good grasp over the core tenants of the markets will only benefit you. In this section, we will explore a method of market analysis you will be able to use throughout your journey in the financial markets: news trading.
News trading, commonly referred to as fundamental analysis, takes into account factors such as geopolitical news events, the reading of market sentiment and economic indicators when it comes to helping traders make informed decisions in the financial markets. The root of this principle is the fact that, at any point in time, assets are either overvalued or undervalued, and are continuously in the process of correcting themselves and moving towards their true value. News trading is employed to establish what this true value is, thus allowing traders to capitalise on an asset’s rise or fall towards it. It is because of this reason that news trading is so focused on external events. The core belief is that events affect sentiment, and sentiment is what drives markets.
Market research is central to news trading as all information that may potentially reveal more about an asset’s true value (in other words, the direction in which the market is likely to head) is immensely helpful. This is why news trading is so concerned with looking at the external factors which affect the market price of assets. These external factors come in the form of geopolitical news (natural disasters, global conflicts), market news (bankruptcies, mergers), economic indicators (Gross Domestic Product figures, employment reports, interest rate decisions) and the reading of market sentiment. Let us now take a look at a number of these external factors and explore the role they play within the financial markets.
Judul konten
Geopolitical events consist of both geographic and political factors. Geographical factors are factors concerning the natural features of the world and the global population. Political factors are factors related to policy or systems of government, often taking into account political parties and the relationships between states or countries. Both geographical and political factors play a role in influencing or delineating a country or region, which allows them to be used in the analysis of economic performance. In turn, this allows us to predict the future performance of tradable assets within the respective countries or regions. The following are examples of geopolitical events which can be used in fundamental analysis:
Judul Konten
- We understand how powerful knowledge can be when it comes to trading in the vast financial markets of today.
- It is the one thing that all successful traders have in common.
- You can think of it as the foundation upon which you build your fortress. It is with this solid foundation that you will be able to build the knowledge.