Data and analysis are important factors to succeed in trading. Especially when you are dealing with highly volatile assets such as cryptocurrencies. Since they are a highly speculative market, there are numerous amounts of data that you need to analyze. When you analyze them, you can identify some trends and patterns. This is vital for understanding the market and making profitable investments with minimal uncertainties.
We have put together this article that contains five expert recommendations for Delta users to perform fundamental analysis in stocks and crypto.
What is fundamental analysis?
Fundamental analysis is not only about the trends. It focuses on finding the intrinsic value of the stock. It includes financial statements, events, industry trends, and external influences. Analysis of such data will let you know the true value of investing in that stock. And whether it will be able to satisfy your goals.
The stock price differs based on various factors. Essentially, what fundamental analysis does is investigate those factors. It will help you find the risks and the earning potential.
Recommendations to do a fundamental analysis
The following recommendations apply to both stocks and cryptos. Although cryptos are more volatile than stocks, fundamental analysis can help you make a smart and viable decision.
1. Do not directly jump into the annual reports
Most annual reports with financial statements of companies are 200 to 300 pages long. So, it can be time-consuming to arrive at something useful. To narrow down, you can take a look at the financial ratios instead. Initially, shortlist a few companies based on your criteria. Then, take a look at ratios like Price to Earnings, Current, Price to Book Value, and Dividend yield. This can help you shorten the list of potential assets.
2. Know the company
Understand what industry they work in. Look at how the sector is performing in recent years. For cryptocurrencies, take a look at the company that created them. Run a thorough investigation on the people behind the project and their past ventures. For instance, you can use a stocks tracker to find the past trends of an asset.
3. Be active in communities
Social media is a good place to know more about the asset you are investing in. For example, you can join groups where you can find cryptocurrency investors to understand their reliability and customer support. For stocks, you can see whether the business has adopted the latest technological trends to develop itself. If not, you can understand that their lack of social value will gradually impact the stock value in the future.
4. Prepare prediction reports
The more people invest in a certain asset, the more it increases in value. Hence, analyze the prospects of the company, its industry, and other factors that might impact future trends.
5. Keep tabs on whitepapers
Whitepapers about a certain cryptocurrency or a company give you a clear idea of what you can expect. These give you insights that you can use to make a profitable decision.
When trading, keep fundamental analysis in mind
A crypto and stocks tracker solution like Delta can help you stay on top of all your investments. However, it is your fundamental analysis that will help you make a buying decision in the first place. Happy trading!
This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.