Combine fundamental and technical analysis

Oct 13, 2025 by windailys.com 103 views

Understanding Risks in Online Gold Investment: The Combination of Fundamental and Technical Analysis

Online gold investment, like other investments, has a potential risk. To manage this risk, investors need to understand and analyze various factors that can affect the price of gold. One commonly used approach is to combine fundamental and technical analysis, as well as calculating the risk value using the Value at Risk (VAR) approach. In this article, we will explore the importance of combining fundamental and technical analysis in online gold trading investment, and how it can help investors make informed decisions.

Fundamental Analysis: Understanding Macro Factors

Fundamental analysis focuses on macro factors that can affect the price of gold, such as news and global issues, economic conditions, monetary policy, and inflation rates. For example, news about geopolitical conflicts or economic instability can increase demand for gold as a safe-haven asset, thus encouraging price increases. Understanding these macro factors is crucial in making informed investment decisions.

News and Global Issues

News and global issues can have a significant impact on the price of gold. For instance, a conflict between two major countries can lead to increased demand for gold as investors seek safe-haven assets. Similarly, economic instability in a major country can lead to a decrease in the value of its currency, making gold more attractive as a store of value.

Economic Conditions

Economic conditions, such as inflation rates and interest rates, can also impact the price of gold. High inflation rates can lead to a decrease in the value of currencies, making gold more attractive as a store of value. Similarly, high interest rates can lead to a decrease in the price of gold as investors seek higher returns in other assets.

Monetary Policy

Monetary policy, such as the actions of central banks, can also impact the price of gold. For instance, a central bank's decision to raise interest rates can lead to a decrease in the price of gold as investors seek higher returns in other assets.

Inflation Rates

Inflation rates can also impact the price of gold. High inflation rates can lead to a decrease in the value of currencies, making gold more attractive as a store of value.

Technical Analysis: Understanding Historical Data

On the other hand, technical analysis utilizes historical data for gold prices to identify patterns and trends that may occur in the future. Some of the commonly used technical indicators are:

*** Moving Average: ** shows the average price of gold in a certain period, helping investors in identifying trends and turning points. *** Relative Strength Index (RSI): ** Measuring the strength of market trends by assessing the speed and magnitude of price changes. High RSI value indicates overbought markets, while low RSI values indicate oversold markets. *** Stochastic Oscillator: ** Comparing the price of gold closure with a price range in a certain period, giving a buy or sell signal.

Understanding Historical Data

Technical analysis is based on the idea that historical data can be used to identify patterns and trends that may occur in the future. By analyzing historical data, investors can gain insights into the behavior of gold prices and make informed decisions.

Value at Risk (VAR): Measuring Potential Losses

The Value at Risk (VAR) approach is used to measure the maximum potential loss that investors can experience in a certain period with a certain level of trust. In the context of online gold investment, VAR can be used to estimate the maximum loss that may occur in one day, a week, or month.

Calculating VAR

VAR can be calculated using various approaches, including the normal approach, skewness approach, and kurtosis approach. The normal approach assumes that returns are normally distributed, while the skewness and kurtosis approaches take into account the skewness and kurtosis of returns.

Example of VAR Calculation

In the example given, the VAR calculation using the normal approach produces a maximum loss of $ 1,563.66 per tray, while the VAR calculation by considering skewness and kurtosis produces a maximum potential loss of $ 1,562.97 per tray. This shows that the skewness and kurtosis approaches can provide more accurate results in calculating risks, especially in unstable market conditions.

Combining Fundamental and Technical Analysis

By combining fundamental and technical analysis, as well as calculating VAR, investors can get a more complete picture of risks associated with online gold investment. This information can then be used to make wiser investment decisions and minimize potential losses.

Conclusion

In conclusion, online gold investment involves a potential risk that can be managed by understanding and analyzing various factors that can affect the price of gold. By combining fundamental and technical analysis, as well as calculating VAR, investors can gain insights into the behavior of gold prices and make informed decisions. This approach can help investors minimize potential losses and maximize returns in the long run.

Recommendations

Based on the analysis presented in this article, we recommend that investors consider the following:

Conduct thorough research: Investors should conduct thorough research on the factors that can affect the price of gold, including news and global issues, economic conditions, monetary policy, and inflation rates.
Use technical indicators: Investors should use technical indicators, such as moving averages, RSI, and stochastic oscillators, to identify patterns and trends in gold prices.
Calculate VAR: Investors should calculate VAR to estimate the maximum potential loss that may occur in a certain period.
Combine fundamental and technical analysis: Investors should combine fundamental and technical analysis to get a more complete picture of risks associated with online gold investment.

By following these recommendations, investors can make informed decisions and minimize potential losses in online gold investment.
Frequently Asked Questions (FAQs) about Fundamental Analysis and Technical Analysis in Online Gold Trading Investment with Value at Risk

In our previous article, we discussed the importance of combining fundamental and technical analysis in online gold trading investment, as well as calculating the risk value using the Value at Risk (VAR) approach. However, we understand that some readers may still have questions about this topic. In this article, we will address some of the frequently asked questions (FAQs) about fundamental analysis and technical analysis in online gold trading investment with Value at Risk.

Q: What is fundamental analysis in online gold trading investment?

A: Fundamental analysis is a method of analyzing the factors that can affect the price of gold, such as news and global issues, economic conditions, monetary policy, and inflation rates. It involves understanding the macro factors that can impact the price of gold and making informed decisions based on this analysis.

Q: What is technical analysis in online gold trading investment?

A: Technical analysis is a method of analyzing historical data for gold prices to identify patterns and trends that may occur in the future. It involves using technical indicators, such as moving averages, RSI, and stochastic oscillators, to identify buy and sell signals.

Q: What is Value at Risk (VAR) in online gold trading investment?

A: Value at Risk (VAR) is a measure of the maximum potential loss that investors can experience in a certain period with a certain level of trust. It is used to estimate the maximum loss that may occur in one day, a week, or month.

Q: How do I calculate VAR in online gold trading investment?

A: VAR can be calculated using various approaches, including the normal approach, skewness approach, and kurtosis approach. The normal approach assumes that returns are normally distributed, while the skewness and kurtosis approaches take into account the skewness and kurtosis of returns.

Q: What are the benefits of combining fundamental and technical analysis in online gold trading investment?

A: Combining fundamental and technical analysis can provide a more complete picture of risks associated with online gold investment. It can help investors make informed decisions and minimize potential losses.

Q: How can I use technical indicators in online gold trading investment?

A: Technical indicators, such as moving averages, RSI, and stochastic oscillators, can be used to identify patterns and trends in gold prices. They can also be used to generate buy and sell signals.

Q: What are some common technical indicators used in online gold trading investment?

A: Some common technical indicators used in online gold trading investment include:

Moving Average: shows the average price of gold in a certain period
Relative Strength Index (RSI): measures the strength of market trends by assessing the speed and magnitude of price changes
Stochastic Oscillator: compares the price of gold closure with a price range in a certain period

Q: How can I use VAR to estimate the maximum potential loss in online gold trading investment?

A: VAR can be used to estimate the maximum potential loss that may occur in a certain period. It can be calculated using various approaches, including the normal approach, skewness approach, and kurtosis approach.

Q: What are some common mistakes to avoid when using fundamental and technical analysis in online gold trading investment?

A: Some common mistakes to avoid when using fundamental and technical analysis include:

Overreliance on technical indicators: technical indicators should be used in conjunction with fundamental analysis
Failure to consider macro factors: macro factors, such as news and global issues, economic conditions, monetary policy, and inflation rates, should be considered when making investment decisions
Insufficient risk management: VAR should be used to estimate the maximum potential loss that may occur in a certain period

Q: How can I stay up-to-date with market news and trends in online gold trading investment?

A: Investors can stay up-to-date with market news and trends by:

Following reputable news sources: reputable news sources, such as Bloomberg and Reuters, can provide up-to-date information on market news and trends
Using technical indicators: technical indicators, such as moving averages and RSI, can be used to identify patterns and trends in gold prices
Analyzing fundamental factors: fundamental factors, such as news and global issues, economic conditions, monetary policy, and inflation rates, should be considered when making investment decisions

We hope that this article has provided some helpful answers to your questions about fundamental analysis and technical analysis in online gold trading investment with Value at Risk. If you have any further questions, please don't hesitate to contact us.