What is Fundamental Analysis?

There are many techniques that people who are interested in trading use when it comes to stocks and cryptocurrencies. These techniques are generally divided into two: "Fundamental Analysis" and "Technical Analysis". Fundamental analysis involves evaluating a stock using fundamental metrics such as earnings, receivables, stocks, economic conditions. Economic events and environmental factors are important for fundamental analysis. Fundamental analysis is often used when making medium and long-term decisions.

With the fundamental analysis technique, it can be understood at what price level it should be traded in the future by looking at the situations that will affect the currency of a country. A few of these situations are; are macroeconomic factors such as the country's inflation situation and the applied policy rate. Not only the economic factors, but also the political and political developments of that country are included in the basic analysis and may cause positive or negative effects on the current currency of the country. In fundamental analysis, the main purpose can be explained by starting from the stock market. Accordingly, an estimated stock price is determined and this price is compared with the current price. If the estimated stock price is above the current price, it is concluded that the stock will be traded at a low value, but if the estimated stock price is below the current price, this leads to the conclusion that the stock will be traded at a high value. As a result, decisions can be made based on fundamental analysis about the company whose shares are to be bought or sold.

Fundamental analysis has its own advantages and disadvantages. It is one of the advantages of fundamental analysis that it is fundamental, comprehensive and can be used in the long term. In addition, the fact that the information to be analyzed is unlimited and the relationships between variable factors are difficult to measure can be listed as the disadvantages of basic analysis. Fundamental analysis methods are generally common in the stock market, and are occasionally used in the forex markets.

Finally, although fundamental analysis is a very powerful and well-established method, it is not really suitable for adapting to cryptocurrencies. Technical analysis, which is another analysis method in cryptocurrency markets, is frequently used. However, when fundamental analysis is used as a whole with technical analysis, investors will be able to provide much more comprehensive information.

Share: