Pitfalls of the Fundamental Analysis in Forex

About Pitfalls of the Fundamental Analysis in Forex Fundamental analysis is widely used in trading for thousands years. In stock trading fundamental analysis of the companies prevails over the technical analysis in the long-term investing. But in Forex technical analysis is more popular, because of the volatile and short-term nature of the foreign exchange market. Nevertheless, fundamental analysis has its fans and many professionals use it to earn profit. What are the common pitfalls that can wipe the Forex trader’s account if he relies on the fundamental analysis?

Relying on a news effect. You can’t rely on the specific news effect that will be caused on a specific currency pairs. For instance, good news on the U.S. economy not always make dollar go up, while bad news not always make it go down. Additionally there might be a very high volatility period after such releases that would make all your fundamental assumptions fails. Although, this is generally true for the U.S. related fundamental indicators, sometimes the same happens with the other currencies and countries