Fundamental Analysis Guide: Strategy & Ratios
Fundamental analysis is one of the two main methodologies that traders use to carry out market analysis, the other being technical analysis. Whereas technical analysts study historical price action, trading volumes and other market data to try to predict future price movements and establish market entry and exit points, fundamental analysts believe that an asset’s market price doesn’t necessarily reflect its true value. Instead, they start by studying macroeconomic data (a top-down approach) or, in the case of share trading, a company’s earnings reports (a bottom-up approach) to build a picture of what an asset is really worth.
If a trader applying fundamental analysis techniques finds that an asset is worth more than its market…
