Fundamental trader


    A fundamental trader focuses their analysis on the elements of the overall economy or corporation and the specific factors within it, to determine the effects these have on the value of the economies’ currency or the corporations’ share price.

    In forex, they will attempt to gauge the supply and demand of a currency by analysing how strong an economy is and in turn the likelihood that investment will flow into or out of that economy.

    Fundamental analysts will make use of economic news and reports, decisions by central banks on interest rates and even the content of speeches by important financial authority figures or politicians.

    When economic analysis reports are published, a fundamental trader will pay attention to:

    • The actual results
    • The difference between the expected results and the actual results
    • The difference between the most recent previous results and the actual results

    In stock trading, a fundamental trader will focus on the financial statements, management of the company, competitive advantages and the competition that the company has, in order to determine the likely demand for the shares of the company and hence the likelihood that the value will increase under increased demand for them.

    Further reading

    Visit our fundamental analysis module to learn about the fundamental factors behind currency price movement: