There are quite a few factors that affect the price of exchange-traded securities; from macro-economic realities to earnings reports, these all cause traders and investors to reevaluate their holdings. While chart patterns and technical indicators (technical analysis) will continue to affect the price of commodities, exchanges rates, equities and bonds, a fundamental analysis is also a major driving force. Here are a few pointers on how to perform a fundamental analysis for beginners.
Technical analysis is very popular with traders because it allows them to make trading decisions based on how other traders are interpreting the facts. In essence, technical analysis helps traders to evaluate how the economy, securities market, sectors, or specific instruments are interpreting and responding to factors that affect profitability, earnings, and the viability of certain companies or instruments. While there are a few technical strategies that can be used to predict where prices will rally to and retreat from, by-and-large, technical analysis can be backward when looking at its focus.
Fundamental analysis, on the other hand, can help a trader to see the short to long-term possibilities of an investment by analyzing growth potential, the availability and demand for resources as well and government's economic policies (fiscal and monetary) to name a few factors. These and other factors will help to determine how desirable equities, commodities, currencies, stocks and bonds will be. Let's take a close look at some fundamental analysis considerations.