Forex market is a very lucrative market with trillions of dollars exchanged daily. To get started in the forex market you need to select a suitable broker.
Conduct Fundamental Analysis
Since picturing the future economic scenario of the whole country can be uncertain, it is extremely hard to accurately predict the future value of a currency. However you can use some of the economic indicators like consumer price index (CPI) and durable goods turnover to get a general idea about a country existing economic status and its future prospects.
Fundamental analysis has got to do with looking at the financial ratios of the company or a market and then determining the strength of a company financially, value of the company and finally the future potential of the company. Financial numbers and ratios give clues to the strength or weakness of the company. You can understand the financial dynamics within the company and determine whether it is in a good state.
Fundamental analysis involves the study of balance sheets, annual reports, future projects, assets, liabilities, sector growth key decisions such as mergers, acquisitions, joint ventures and change in management whereas technical analysis is study of price and volume of trade based on the demand and supply patterns that are continually changing over time.
Though fundamental analysis is more powerful, technical analysis is more relevant considering the fact it is readily available unlike fundamental analysis .however both are important in determining the actual value of a share .
Fundamental analysis are made based on the available information in the company,
• Available funds
• Company management
• Profits and losses
• Sales orders
• Future demand of their products
Technical analysis is based on demand and supply and volume of trade. It helps us in identifying entry and exit levels.
Fundamental analysis is a method of evaluating the value of asset by using real data’s available like profit loss account, future growth etc.
Fundamental analysis needs a lot of data like company’s income, expenditure, future plans, assets, liabilities
Fundamental analysis needs a lot of data and gives true value of a company.
Fundamental analysis is all about getting to understand the company, health of a business and its future prospects. It includes reading and analyzing annual reports and financial statements of a company to get an understanding of company’s comparative advantages, competitors and its market environment.
Fundamental analysis also has a number of disadvantages like tedious and time consuming, time delay, may need to hold for long term, and does not provide trade signals, manipulated numbers and accounting method.
However you have to envisage the whole picture keeping in mind several factors of both technical analysis and Fundamental analysis.
This article has been written by Mr. Kishan Soni faculty of Future Wings Media that provides Share Market Course In Delhi and many other courses.