How to identify market trends using fundamental analysis

Before you begin to trade in the financial markets, traders need to familiarize with the main economies of the world and to learn how to conduct fundamental analysis. We can't say this for everyone, but if you want and intense work, the trader can learn to analyze information, which is necessary while trading in the financial markets.


For traders who decide to use fundamental analysis, there is a huge database that is on the website of the International monetary Fund. Typically, the IMF updates its database in April and then in September or October of each year.


Traders can use indicators of the IMF for information on the world's largest economies. Key indicators that are necessary for a trader to trade include: overall economic growth, rising budget deficit, employment, inflation, balance of payments, trade balances, fiscal indicators, interest rates and commodity prices.


Useful and on online platform of the IMF you can find all the indicators from 1980 to the present. Also, the IMF experts publish forecasts for the next few years, in addition, sometimes you can find the information for a longer period, but it will touch on certain key indicators. Please note that the data for some countries may be incomplete, so you may need to look for some information in addition.


Next, we proceed to the analysis of world economies for growth. It is understood that common standard of measurement of economic performance include the use of different metrics of growth. Often, for economic comparison traders use indicators nominal gross domestic product (GDP) or purchasing power parity (PPP). Both indicators are expressed in monetary terms. Often, if carried out comparisons between countries, the amount is converted into United States dollars.


GDP is a specific measure by which we can understand the final market value of all goods and services produced by a particular country or region in a fixed period of time. The range of monitoring will be quarterly or annual.


In addition, the estimate of GDP is often used to evaluate the economic efficiency of a country, region or economic bloc, and this is often useful when conducting quantitative comparisons between the economies of different countries and regions.


But it does not say, GDP does not reflect differences in cost-of-living inflation rates observed in different countries, that is why analysts prefer to use the GDP, which includes PPP per capita.


Purchasing power parity is a ratio of two or several monetary units of the currencies of different countries, established by their purchasing power for a given basket of goods and services.


GDP PPP is a more useful economic criterion when comparing differences in level of life between different countries and geographic regions. In addition, if the provider is using PPP GDP as a measure of economic ranking increasing the rating the less developed countries in comparison with developed countries.

25 March, 2020

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