TIP: How to use fundamental models to forecast trends?
|Using fundamental models to forecast trends in the exchange rates can be quite difficult. The analyst shall examine several economic reports as many times the figures from one model alone are not sufficient. It is also important to go behind the figures, read the reports closely, and analyze their meaning in the global picture. In other words, you must read more than the headlines and see what is said between the lines!
If you feel interest in using fundamental approaches, make sure you are not seduced by the theory. They can be intellectually quite stimulating but on the other side they can also overload you and make you succumb to the “paralysis of analysis.” Remember the importance of building the big picture, but do not confound it with the practical decision making process. Read more
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