Text from vid:
Hi, traders. This is Tek. Welcome to my course on Fundamental Analysis.
Fundamental Analysis is the study of the economic, political, and social factors that affect the supply of and the demand for a country’s currency.
Currency prices change due to changes in supply and demand.
When demand increases, a currency will go up in value. When supply increases, a currency will go down in value.
Things that increase the supply and demand for currency include: the Current Account, which records trade flow into and out of a country;
the Capital Account, which records money flow into and out of a country;
economic reports, interest rates, growth rates, inflation, unemployment;
actions or statements by a government, Fed official, Treasury official, or by a central bank;
actions or statements by the IMF, the World Bank, or from a G Meeting;
commodity prices such as oil and gold;
and sentiment.
There is more than one set of beliefs in what affects currency prices.
There are several economic models and theories that traders will study to assist them in analyzing fundamental data.
These theories and models are not absolutes. Rather, they are hypothetical and theoretical examples that give the trader the basic understanding of what moves price so they can use this information to analyze fundamental data.
Some of these theories give opposite information and contradict each other.
In fact, each theory on its own has its own flaws when used as a standalone.
Furthermore, each currency has its own characteristics. What applies to one currency may or may not apply to another.
For instance, the Aussie dollar and the New Zealand dollar are both much more affected by gold prices than other currencies are, because their countries produce a lot of gold.
Traders will study the economic conditions and characteristics for each country so they can properly weigh each piece of economic data they analyze.
This doesn’t mean a full crash course in economics is necessary. In my opinion, traders can become fairly knowledgeable with just a little bit of study.
For the first section in the course, we’ll cover an overview of basic economics. We’ll look at supply and demand, inflation, unemployment, fiscal policy, and monetary policy.
In the next section, we’ll cover the Current Account and Capital Account and a variety of economic theories and models.
In the next section, we’ll look at economic reports and other data.
Then, we’ll have an overview of the individual characteristics for each currency.
And finally, we’ll look at fundamental trading strategies and ideas.
So, here we go. In our next video we’re going to start our basic introduction to economics with an overview of supply and demand. See you then.
Music by:
Danse Macabre – Low Strings Finale (Theme)
Monoko
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Home Base Grove
Kevin MacLeod @ incompetech.com
