Are You A Fundamental Analyst?

Are You A Fundamental Analyst?

Once you understand the futures contract and how it works, it is now time to decide your trading strategy. It is true that you will have to keep learning and understand new strategies, however, to begin with, you need to define whether you will trade using technical analysis or fundamental analysis. This is best decided when you understand what your strengths and your weakness are and once you understand what you are comfortable with it will let you use the same strategies over and over again and make profits.

Technical analysis and fundamental analysis

The traders normally use one of the two kinds of analysis. These are the technical analysis or the fundamental analysis. These two approaches are what is commonly used. The fundamental analysts look at the long history and they look at the economic factors closely to understand when the move will be bullish or bearish. The technical analysts look at the charts and take a stance on the market. Which among the two is better is something that is still debatable. It is not important to understand which approach is best but which approach suits you.

Asses the trend in the economy using fundamental analysis

Those who trade in the market using fundamental analysis looks at the asset and the economic trends and this is what they consider to be a very important factor. The fundamental analysts look at the quarterly earnings of the company, any new product release, the valuation of the company and the performance outlook of the company. These are watched closely to decide when buying a particular asset.

The commodity traders look at the supply and demand of a commodity. If you wish to trade in the oil futures using the fundamental approach that you will have to look closely at the companies that are producing oil. For each of the commodities, one needs to understand the factors that cause a shift in supply and demand. When there is supply reduction it pushes its prices higher. When there is a reduction in demand then this causes the commodity prices to go low.

When trading the currency market many macroeconomic factors are paid close attention to, to know where are the prices of the currency is headed to. The inflation and unemployment numbers, manufacturing data and the outlook of the central bank are watched closely when trading currencies.

When you start to trade fundamentally on the Bitcoin Trader it is important that you pay close attention to the fundamental factors that could cause a shift in the demand or supply of the asset.