Fundamental analysis is the analysis of financial and diplomatic events that can affect the direction of the prices in financial markets.
Fundamental analysis studies international economic, financial, and political factors, their correlation, and their influence on the behavior of exchange rates. In this way, they can spot what is absent in graphics. They serve the market statistics.
Investing and Trading with Fundamental Analysis
If the essential value is higher than the current market price, the stock is deemed to be undervalued, and a buy recommendation is given. If the essential value is lower than its market price, the stock is considered overvalued, and a sell recommendation is issued.
Investors ask (purchasing with the prediction that the stock will rise in price) companies that are strong and go bid (selling shares that you consider will drop in value with the presumption of repurchasing them at a lower rate) companies that are weak.
This method of stock analysis is considered to be the opposite of technical analysis, which anticipates the direction of prices through an analysis of historical market data such as price and volume.