Introduction to the Fundamental Analysis
On the Market Binary Options the operators always use of an analysis to create its own strategies or trading methods. In Binary Options there exist two basic types of analysis, the technical analysis and the fundamental analysis. In this article we will describe the fundamental analysis and how it is used in the operations in Binary Options.
The fundamental analysis is based on the estudo of the political and economic conditions that they could affect at the prices of the currencies. In Binary Options, the operators who use of the fundamental analysis depend on the news reports to collect information about the percentages of unemployment, economic policies, inflation and valuations of increase.
The fundamental analysis is used often to obtain a global vision of the movements of the currencies and a general panorama of the economic conditions that they affect to a specific currency. Most of the operators trust in the technical analysis to plan points of entry and of exit in the market and to complement its conclusions with the fundamental analysis.
The dynamics of the offer and the demand affect at the prices of the currencies in Binary Options, which in turn, they are affected by the economic conditions. The two most important economic factors that affect the supply and demand are the interest rates and the soundness of the economy. The economic soundness turns out to be affected by the Gross National Product (GDP), foreign investment and the trade surplus.
Several indicators are published by the government and academic sources. There are reliable indicative of the economic vitality and all the sectors of the market of investments are supported to so much of the same ones. The indicators are published generally once a month although some of them are published weekly.
Two of the most important fundamental indicators are the interest rates and the international trade. Between other indicators the prices Index is included to the consumption lasting (IPC), Orders of consumer goods, Index of prices to the producer (IPP), agents' Index of buys and retail sales.
Interest rates - Can have an effect of consolidation or of weakening in a currency in particular. On the other hand, the high interest rates attract foreign investments which will consolidate the local currency. On the other hand, the investors of the stock market react often to the increases of the interest rates by means of the liquidation of its financial shares with the conviction that the increase of the cost of the loans will affect unfavorably many companies. The stock-exchange investors can liquidate its financial shares causing a bassoon on the stock market and the national economy.
The determination of which of these two effects will it be the one that prevails, depends on several complicated factors, but a consensus exists generally between the economic observers of how some specific changes in the interest rate will affect the economy and the price of a currency.
International trade - Is an unfavorable indicator when a deficit exists in the trade balance (more imports than exports). A deficit in the trade balance implies that the funds are going out of the country to buy goods done abroad and this might have an effect depreciativo of the currency. This way and quite, generally the expectations of the market dictate if a deficit in the trade balance is or not unfavorable. If a country usually operates with a trade balance in deficit, this factor was already included in the price of the currency. The trade deficits will affect only at the prices of the coins when they are superior to the expectations of the market.
Between other indicators there is included the IPC (prices Index to the consumption) - an evaluation of the cost of life, and and lIPP (prices Index to the production) - an evaluation of the costs of the production of goods.
The GDP (Gross Internal Product) calculates the value of all the goods and services inside a country, while the monetary attaché M2 calculates the entire sum of all the currencies.
There exist 28 main indicators that are used in the United States. The indicators have a strong effect on the financial markets so that the operators of Binary Options will have to know about the same ones on having prepared its strategies. It will find information updated in many web sites and most of the brokers of Binary Options provide this information as part of its services.