Fundamental Analysis & Macroeconomics

Hardcore traders invariable get bored when you start talking about things like Fundamental Analysis or Macroeconomics. They prefer to dive straight into the charts and into the Technical Analysis side of things.


One reason for this is the vague nature of this whole field. The pundits often contradict each other – and sometimes even themselves – so it’s hard to get a clear picture of what’s going on.


Fundamental Analysis deals with the intrinsic value of any security, for example of a stock. In case of the latter, we look at different key numbers, at cashflow, balance and so on. We end up with conclusions that often contain a price target for the next year or so, and a recommendation as to why the company is currently a buy, a sell or a hold.


When we switch to a helicopter view on the economy, we talk about Macroeconomics. Focus is on the national economies and global economy at large. Themes are monetary and fiscal policy, economic growth, unemployment, or inflation – just to name a few. The U.S economy is at the forefront of that analysis, being the largest economy in the world (with China in second spot).


It is essential for the trader to always keep an eye on current macroeconomic tendencies and events, as they give context to the market, he or she is trading. Otherwise, we would be trading blind.  


On the other hand, it is equally important not to fall into the trap of overanalyzing the economic data. Macroeconomics is extremely complex, and it’s next to impossible to set up simple rules for the outcome corresponding to certain events.


Here at Ago-trade, every Monday morning we present our take on things from a macro perspective. This includes a market status and a look at the week ahead, i.e. which main events are listed in the economic calendar and how are they likely to affect the markets in case of different scenarios (“good” or “bad” numbers)? The analysis can be found on youtube, facebook and linkedin.


We also offer live coverage – and trading – of key news events, such as the release of inflation numbers, Non-Farm Payroll and FOMC decisions on the Fed Fund Rate. You can buy access to live trading here.