Fundamental Analysis Fundamental analysis is a way to evaluate the intrinsic value of a stock or cryptocurrency. We do this by reviewing economic and other qualitative and quantitative factors as well as researching the underlying factors that might drive an asset’s value and potential future performance. (Reminder: Quantitative data refers to any information that can be quantified, counted or measured, and given a numerical value. Qualitative data is descriptive in nature, expressed in terms of language rather than numerical values.) When conducting fundamental analysis for an asset here are a few of the factors to consider: Research the currency or the company: Look into its utility, products, services, industry, competitors, market position, financial health, weak points/threats, and sentiment around the company. (SWOT analysis – strengths, weaknesses, opportunities, threats). Financial Statement Analysis: Reviewing the company’s financial history, statements, income statement, and balance sheet. Risk Assessment: this takes into account policy, regulatory changes, potential lawsuits, macroeconomic factors. Industry: What industry is the asset is in and how that impact its future performance? Other External Factors: Geopolitical Developments: Geopolitical events, trade disputes/tensions, political instability, or any war/conflict. Fundamental analysis would take all this into account to see how these factors might affect international trade and supply chains, corporate profits, and market sentiment as this would affect the performance of an asset. New Policy or Changes in Monetary Policy: Thinking about any policy changes or factors that might affect interest rates, quantitative easing etc, as this directly impacts the cost of borrowing, money printing, inflation, unemployment and overall financial conditions and market sentiment. Technological Advancements: Advancement and the rapid growth of technology such as AI can displace workers, disrupt industry, create new jobs, and affect competition between companies or assets. Technical Analysis Fundamental analysis can be complemented by technical analysis which focuses on past price patterns and market trends to try and understand potential future price movements. This relies on charts and technical indicators to make predictions. Once you have selected an asset and are doing Technical Analysis take into account: Charts: (stochastic RSI, volume etc.) Candlestick charts are best Chart type: If you are short term trading then day traders tend to use the 15m, 30m charts. If you are swing trading look at hourly, 4 hour, and 24 hour/daily charts using 1 hour and 15m charts to find price entry, stop loss and take profit levels. Swing trading is less time consuming. Long term investors analyse weekly or monthly charts for broader trends. Identify trends: Look for patterns and trends. The trend is your friend until the end of the trend. Is it bullish, bearish, or sideways/neutral? Support and Resistance levels to mark your entry and exit points. Support is where there is a lot of buying interest and a bounce, resistance is where the selling pressure prevents the asset price from rising further Risk Management: Always incorporate risk management. Stop losses are so essential (Don’t learn the hard way). Take profits are good to secure gains. Technical Indicators: These are math calculations based off past price and volume data. For example, moving averages, relative strength index (RSI), moving average convergence divergence (MACD) and Bollinger bands. Other factors like historical price data and trading volume
