Fundamental Analysis

How To Use Fundamental Analysis?

Fri May 21 2021 08:17
Fundamental analysis is important, but it is also confusing for novice traders. As a beginner trader, you don't know where to start. You don't know how to do fundamental analysis to increase your profits. Fundamental analysis can help you to become a successful trader. But there are many doubts in the minds of traders about fundamental analysis. 

If you are also looking for a guide that explains more about how to use fundamental analysis. Then you have come to the right place. Here you will get all the information you actually need to be successful as a trader using fundamental analysis. Fundamental analysis is useful, but it will only benefit you if you use it in the right way. 

Deep dive into fundamental analysis 

Fundamental analysis is also useful for beginners. Many experienced traders out there use technical analysis. But technical analysis is not suitable for beginners. If you are a beginner and need analysis strategies, then you can use fundamental analysis. But still, you need a step-by-step process to follow with fundamental analysis. 

Here we will tell you about the step by step process. Also, we will tell you the reasons why you should start using fundamental analysis. 

Reasons Why Fundamental Analysis Is Important? 

A trader who trades financial instruments needs analysis. Whether one is using day trading strategies or long term trading strategies. Whether one is a forex trader or associated with stock trading. Fundamental analysis is always important because you have to pre-select assets for yourself. 

There are thousands of assets in the financial market. But you need only a few to start trading. To select a few from the ocean of trading assets, you need an analysis. You can do technical analysis or fundamental analysis. Below are some reasons why you need fundamental analysis.

Asset Evaluation 

Asset valuation is the main reason for using fundamental analysis. Markets with high liquidity and volatility need to be valued. The assets of such markets also need to be evaluated before a trader makes trading decisions. Asset valuation tells you whether an asset is valued correctly or not.

Trend Prediction 

The next important reason for using fundamental analysis is trend forecasting. Trend trading is the most important trading style that most traders follow. Therefore, it is very important for traders to predict the trend. 

Fundamental analysis and technical analysis are the best way to do this. But short term traders or intraday traders prefer technical analysis more than fundamental analysis.

Decision Making 

The ability to make decisions makes a trader successful. Whenever there is an uptrend or downtrend in the market, a trader has to take action. From price action to buying or selling action, a trader has to make decisions. Fundamental analysis will make a trader capable of making decisions.

Technical Strength 

Nowadays, trading has become more and more technical. The use of charting software, everything is technical. There are more chart patterns that can be read even by a day trader. Fundamental analysis gives technical strength to your trading.

Steps To Conduct Fundamental Analysis 

Now you need a step-by-step guide to fundamental analysis to make your trading profitable. Whether you are in a bullish or bearish market, you will make the right decisions with the help of fundamental analysis. So let's follow the steps to perform fundamental analysis.

STEP 1: Choose Right Assets 

The first step you need to take in your trading system is to choose the right assets. Choosing the wrong assets can hurt your profits. You need to choose the right market and the right assets. Decide with care whether you want to enter the forex market or the stock market.

STEP 2: Get Right Information & Data 

The information you will use will be different in different scenarios. For day traders of the forex market, there will be different information and data related to currency pairs. 

For stock traders, there will be different data related to stock markets. In the same way, there will be different trading signals and other metrics. 

STEP 3: Choosing Tools & Resources 

There are many tools that are available in the market. From automated trading platforms to analytical tools, you will need different tools for analysis. It is the best idea to choose the right tools according to your skills, requirements and goals. Find out what tools you need and then choose such tools and resources for your analysis.

STEP 4: Analyze Fundamentals 

The next step is to start analyzing assets and their relevant information. No matter what trading approach or technique you have, you can analyze them in many ways. Now you need to use different trading indicators to get more accurate data.

STEP 5: Compare & Analyze The Output 

You can use any trading method or plan to compare and analyze the results of your fundamental analysis. Fundamental analysis will give you results or output, then you need to analyze it.

STEP 6: Take Action 

After analyzing the output of the fundamental analysis, you need to take action. You need to optimize your forex trading strategy or your stock trading strategy. You can try your fundamental analysis strategy in demo trading before you enter live trading.

Tips To Conduct Fundamental Analysis 

Here are some tips for you to improve your fundamental analysis in a more accurate way. If you want to get better results then you can try these tips.

Customize For Different Markets 

Trading analysis methods differ from market to market. For stock traders, there are different methods of fundamental analysis. And for the forex market, different methods are used. 

You need to customize a fundamental trading strategy according to your chosen market and assets. From cryptocurrencies to stocks, you need a customized strategy. 

Use Correct Information & Resources 

A trading opportunity can come in any form and you can prepare for it. There are many resources available in this arena of trading. You need correct and accurate resources.

Verify Results Before Taking Actions 

Fundamental analysis is not recommended for short term trading. It is recommended for long term trading. But short term traders can also use it with the help of verification. The result that fundamental analysis gives must be verified before taking any decision.

Study Before You Enter The Market 

Fundamental analysis is considered to be one of the simplest trading techniques. But that doesn't mean you can use it without any guidance or learning. You need to learn how to trade with fundamental analysis before you enter the market. 


Fundamental analysis is as important as technical analysis. You can choose which one is better for you depending on your needs. If you follow all the steps then you will get accurate results from your fundamental analysis. Fundamental analysis is one of the easiest methods to analyze trading assets. 

You can analyze all assets using this method. It is much easier than technical analysis. Fundamental analysis is a lengthy process that takes more time to show results. But it is said to give stable and more accurate results.

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