When it comes to trading – whether you’re dealing with century-old stocks or nascent cryptocurrencies – there’s no exact science involved. Or, if there is, Wall Street’s top players ensure that the formula remains a well-kept secret.
What we have instead is a vast array of tools and methodologies employed by traders and investors. For the most part, you can sort these techniques into two categories: fundamental analysis (FA) and technical analysis (TA).
In this article, we’ll dive into the basics of fundamental analysis.
What is fundamental analysis?
Fundamental analysis is a method used by investors and traders to attempt to establish the intrinsic value of assets or businesses. To value these accurately, they’ll rigorously study internal and external factors to determine whether the asset or business in question is overvalued or undervalued.