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Trends & Analysis
News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

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Keep an eye on these key S&P 500 levels

Trends & Analysis
News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

News

Keep an eye on these key S&P 500 levels

Fundamental analysis definition

Fundamental analysis is a method of evaluating the value of an investment by analysing economic and financial data. The goal of fundamental analysis is to identify undervalued or overvalued assets by examining their underlying financial and economic performance. This includes analysing a company’s financial statements and cash flow, as well as macroeconomic factors such as interest rates, inflation, and GDP growth.

Fundamental analysis is particularly useful for long-term investors who are interested in buying and holding assets for an extended period. By understanding the intrinsic value of an investment, investors can make informed decisions about when to buy or sell a particular asset.

 

Techniques of fundamental analysis

Some common tools and techniques used in fundamental analysis include value investing, discounted cash flow (DCF) analysis, and analysis of earnings forecasts. These styles and strategies allow investors to evaluate a company’s financial health, growth potential, and future profitability.

In equities, fundamental analysis normally means looking into balance sheets and the firm’s profitability. A stock investment strategy focused on these metrics is value investing, where traders try and identify companies which are relatively undervalued in comparison with the broader market. The idea is that these companies will go on to outperform as other investors ‘catch up’ with the analysis.

 

Fundamental versus technical analysis

Fundamental analysis is often considered the rival or even opposite of technical analysis, the study of price movements and market data to try and predict future shifts. This is not necessarily the case, as although most traders tend to specialise in one or the other, technical and fundamental strategies should be used to complement each other.

One method is to use fundamental analysis to screen a number of stocks or other assets which you have a positive view on, then wait until technical conditions indicate a good entry point. This combination of fundamental case-making with technical analysis for market timing is justly popular.

 

Start trading with ADSS

ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

See all glossary trading terms


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