Especially in intraday trading, technical analysis or market technology is propagated as one of the most successful analysis techniques. On the one hand, this is due to the fact that market technology is easier to understand and that information on historical prices is accessible almost everywhere, and at least on the basis of the daily closing price.
Die-hard market technicians also argue that all relevant events in the price are already priced in and you don't need any further information. This attitude is correct and advantageous, because successful trading is accordingly associated with market follow-up strategies.
"You shouldn't try to beat the market, you should follow it," they say. This statement is confirmed by many professional dealers. The fundamental analysis is criticized out of it by being accused of wanting to predict too much. And since forecasts are statistically unsuccessful in the long run, fundamental analysis has a decisive disadvantage in the eyes of market technicians.
On the other hand, fundamentalists argue against market technology by saying that it is not a science at all and theirs Forecasting power based on a basis that has nothing in common with the real, price-driving factors of a value. The market technician does not understand why he is now assuming a rising or falling price.
Objectively speaking, both are not wrong. But how do you use this knowledge now?
Is it possible to speculate fundamentally at all?
Of course it is easier to first deal with technical analysis, because the trade almost always entices you to do so to hang on the chart like in front of the slot machine. At the same time, one deals with market technology. And since the whole thing takes place visually, it is, unless you do mathematical and statistical evaluations, to move around a lot more comfortably than books and newspapers.
But at this point it should be expressly pointed out that market technology is not the only thing Just drawing lines in the chart is a must if you want to get good at it. But which are the fundamental fundamental factors?
It depends on which basic values you want to trade and what you mean by fundamental. As a rule, all factors that have a direct influence on value are understood to be fundamental. In the case of shares, for example, it would be sales or the profits achieved in one year. These influencing factors are also called value indicators because they contribute to the value of the share.
You could of course sit down and learn the company valuation with all its methods. But even professionals believe that the theoretical textbook company valuation is not free of subjective assessment and that in the end it depends on how good the valuer's knowledge of the company and the industry is.
However, the fundamental company valuation becomes problematic if you want to speculate on the markets at short notice. Then the actual value that a company will have in the future is not really decisive. Why is that?
Capital markets are largely driven by market participants' expectations. These expectations are reflected in the prices much more than the value that results over a longer period of time. Therefore, there are also upheavals on the markets as soon as it is recognized that these expectations were not correct.
And this is exactly where the trader can start. In his case, fundamental no longer means predicting the value in the longer term, but learning to analyze short-term expectations. There are several means at his disposal, but he has to find out in advance which influencing factors influence the traded value the most.
Example fundamental analysis based on the Canadian dollar
This example simply shows a benchmark analysis and the resulting strong correlation between the value of the Canadian dollar (USD / CAD) and the price for the crude oil grade WTI.
The Canadian economy is heavily dependent on the oil price - at least that's what they think the market participants and expect a stagnating economy. Even the drop in the unemployment rate and a rising trade balance could not prevent the Canadian dollar from falling in value.
The example shows that the fundamental analysis is not necessarily related to countries using currencies in the case of currencies To evaluate parities and the like. Knowing this is of course an advantage, but is not absolutely necessary for short to medium-term trading.
It is important for traders to recognize the factors on which market participants base their expectations. These can be commodity prices, monetary policy measures or economic indicators that are highly meaningful. In the case of speculation, following the market also means following the expectations of the market participants.
As part of the fundamental analysis (as shown above), it is also possible to include the technical analysis. The combination of the two analysis techniques contributes to the fact that the trader is more concerned with the functioning of the capital markets and understands them better.