Fundamental Analysis

Do You Want Problems? Trade Using Fundamental Analysis!

Fri May 14 2021 15:57
A trader who trades stocks or currency pairs with fundamental analysis cannot trade comfortably. Some reasons make fundamental analysis a more difficult way to analyze financial instruments or even trading markets. If you are ready to start stock trading or currency trading with fundamental analysis, then this post is for you. 

You must read this post before developing a trading strategy based on fundamental analysis. Many trading strategies are successful with fundamental analysis. But still, there are many problems that you will face as a stock trader or forex trader using fundamental analysis.

Problems with Fundamental Analysis 

If you are reading the title of this post, fundamental analysis can cause problems for your trading portfolio and make you lose money. You may think that fundamental analysis is just a useless trading technique. However, this is not entirely true because there are many other forex traders or stock traders who build successful trading techniques using fundamental analysis. 

However, it is important to know how fundamental analysis can lead you to less profitable trading. So let's start with this post that talks about the following

Problems That Fundamental Analysis Creates 

There are many traders who will tell you that fundamental analysis is better than technical analysis. But still, there are many problems that fundamental analysis brings to you as a trader. So if you want to start trading using fundamental analysis, then you must read this post. 

Here we will tell you that fundamental analysis is not the perfect trading technique. It also has some disadvantages and you need to know about them. However, you can learn how to trade using fundamental analysis. From forex market to stock market, every trading platform will have such problems with fundamental analysis. 

#1. Time-Consuming 

In this arena of market trading with high volatility and liquidity, you need more fast processes. In online trading platforms, there are quick changes in market trading. That makes it important to make quick decisions. But when we use fundamental analysis, it takes a lot of time. It is a time consuming process and not suitable for impatient traders.

#2. Manipulated Market Data 

Data manipulation is always there in stock markets. Fundamental analysis is used more by stock traders than forex or cryptocurrency traders. Therefore, there is a great risk of data manipulation in the stock market through fundamental analysis. So if you are a stock trader who is willing to use fundamental analysis, then you might face this problem. 

Forex trading with fundamental analysis can be beneficial. No matter how good you are at using technical indicators and how many trading courses you have enrolled in. You cannot avoid data manipulation when using fundamental analysis.

#3. Less Control As A Retail Trader 

No matter how much hi-tech trading software you use for fundamental analysis, as a retail trader you will not have much control. In live trading, there are different types of traders in all markets. There are institutional traders, corporate traders, banks, fund managers and retail traders. 

Retail investors or traders have the least control in a trading system where fundamental analysis is used. From the forex market to the stock market, you will see the same influence in every market.

#4. Alterations 

alue investing is important in any stock market. When you take a trading course, they teach you to pick stocks or assets with high values. But what if fake values are created in the market - This problem of fundamental analysis is related to data manipulation. 

Market influencers and trading experts or companies create fake values with the help of many chart patterns, market news and other resources. Beginners get trapped in such trading systems and lose money.  

#5. Issues With Short Term 

As a long term trader, fundamental analysis is a good option for you. But as a short term trader, you cannot get any benefits from it. However, some experienced traders believe that this is just a myth. They believe that you can use fundamental analysis for both short term and long term trading. 

However, most intraday traders ignore fundamental analysis. Methods like technical analysis are more preferred for intraday trading. However, you can use it for swing trading, but as an intraday trader, you are never advised to use fundamental analysis. 

#6. Too Many Assumptions 

Most fundamental trading sources are not reliable. Sometimes there are too many assumptions about a trading market and financial instruments. 

All these assumptions and predictions are seriously considered in fundamental analysis. And the worst thing is that including more assumptions in the analysis makes the results inaccurate. Too many assumptions affect the accuracy of the results of the analysis.

#7. Incorrect Signals Due To Errors 

As data manipulation and fake values are created in fundamental analysis, there will be more chances for wrong trading signals due to errors. There will be more chances for errors because the sources that provide you with information and data are not authentic. 

Mostly, this problem occurs when you are trading stocks. Incorrect trading tips or biased investment recommendations can affect a trading signal in fundamental analysis. Some market news editors recommend you to invest money in overvalued assets. You will never make money in the market with such investments. 

Who Can Use This Analysis? 

Now the question arises, if fundamental analysis causes so many problems, why do the majority of traders use it? If they use it, whether they get profits in their hands or not? More importantly, is it good for you to use fundamental analysis for a financial market? 

Here we will let you know whether technical trading is good for you or you should use fundamental analysis. In these days of advanced trading or algorithmic trading, you need to choose the right method for you. 

Long Term Vision Traders 

Long term traders who are not willing to invest money based on short term trend trading should use fundamental analysis. If you are a swing trader or a long term trader then you can use it.

Experienced Traders 

Traders with no experience are not recommended to use fundamental analysis. However, if you are familiar with technical trading and technical analysis, then you can use fundamental analysis.

Traders With Influence 

If you are not a retail trader and are a fund manager for an institution or something similar, then fundamental analysis is best for you. Retail traders have less control over the markets using fundamental analysis.


It does not matter if you are using the best trading services from the best online broker. If you are not good at analyzing the markets and assets, then it is not easier to make profit from your trading account. 

Fundamental analysis and technical analysis are the two main methods used by traders. You can use fundamental analysis but you should know the main problems that it creates for you. These problems can be overcome by using some tactics.

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