What Fundamental Analysis Actually Means #
Fundamental analysis means studying news and macroeconomic data. Things like interest rates, inflation, and GDP. These numbers affect stock markets and commodity markets in a big way.
This kind of analysis looks at the real-world economy behind the price. Not the chart. Not the candles. The actual economic forces driving everything.
Why US News Matters So Much #
Some news is specific to the United States. This kind of news is extra important. Why? Because it affects the value and credibility of the US dollar itself.
And a huge number of assets are priced in US dollars. This includes almost every cryptocurrency. It includes major commodities like gold and oil. It also includes every forex pair that has USD on one side of it.
So when US economic news comes out, it can move a massive part of the financial markets all at once. This isn’t a small effect. It’s one of the biggest drivers of price movement across multiple asset classes.
Where to Find This News #
A good place to track these economic events is Forex Factory. It lists upcoming economic news, along with expected impact and past results. It’s a solid starting point if you want to see what kind of news actually matters.
Why Algorithms Don’t Naturally Understand News #
Here’s something important to understand. When an algorithm is trading, or finding a signal, it has zero awareness of news by default. None. It only sees price data, unless you specifically build something to change that.
There are ways to feed news into an algorithm. One option is using APIs from news websites to send information directly into the system. Another option is using language models to read news and draw conclusions from it. This could follow a fixed instruction, or even a simple decision tree.
But here’s the thing: these are advanced topics. They belong to the world of algorithmic trading combined with AI in finance. This isn’t something for Level 0. It’s not even something for Level 1 or Level 2. It’s too early for that right now.
So don’t worry about figuring out how to use large language models for news analysis just yet. That’s not your job at this stage.
A Simpler Starting Point: The Efficient Market Hypothesis #
For now, you can lean on a simpler idea: the Efficient Market Hypothesis, proposed by Eugene Fama. It says that everything you need to know is already reflected in the price.
This makes a lot of practical sense today. High-frequency trading firms and large financial institutions get access to news faster than we ever could. Their trades react to that news almost instantly. By the time we see the news, its effect is often already baked into the price.
So Should You Worry About News or Not? #
News can absolutely help improve an algorithm’s performance. That’s true. But not having news integration doesn’t mean your algorithm will lose money. That’s also true.
This is why, at Level 0, going deep into this topic isn’t necessary. You can safely skip it for now. Advanced levels will absolutely cover this in detail later.
Conclusion #
Fundamental analysis means looking at real economic news and data, not just price charts. US news matters most, because so many assets are tied to the US dollar. Algorithms don’t understand news on their own, and building that connection is an advanced topic for later levels. For now, leaning on the idea that price already reflects available information is a reasonable starting point.
One-Sentence #
Fundamental analysis studies economic news like interest rates and inflation, US news moves markets the most because of the dollar’s reach, and algorithms need extra work to understand news at all, so beginners can rely on the idea that price already reflects it.