Fundamental analysis is one of the two primarily used analysing strategies in asset markets. Instead of reading the charts and historical price trends, fundamental analysis lays its focus on determining a stock’s true value. A stock’s value can be measured by studying anything that can have an affect on the value of the stock:
Macro-economics: The economical branch that involves ‘’total amount’’ of research. These economic indicators apply to large groups, such as all construction companies, all households or even entire countries. This will give a general idea of a market value price to help determine if a stock is overpriced or underpriced.
Micro-economics: Micro-economics research is usually in the market of buying and selling goods or services, how individual economic entities in an economy (such as individual households and enterprises) make decisions about the distribution of scarce goods.
Fundamental analysis is made based on researching events that have happened in the past and present and what kind of impact this had on the value of the stock/coin. E.g investments that were done by large companies, news exposure, accomplishments of the project and so on.
For medium to long-term investments fundamental analysis is relevant whereas technical analysis is more favorable for a short term investment. Advanced traders know how to make efficient use of both analysing strategies.
This is one of the two primary analysing strategies. Check out this article to read more about technical analysis
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