What is Fundamental analysis

A fundamental analysis is an analysis that is conducted by traders and investors to determine the value of a certain security (a investment object).

Investors and traders often use fundamental analysis to determine what the current real value is of a certain security and what the real value will be in the future. With this information the Pro’s decide what their plan will be for investing or trading.

For example, if you are using a fundamental analysis in stocks. You fundamental analysis will cover a range of fundamentals that create the value for the company. A example of a company fundamentals will be like the financial report of the company. How much profit did the company make? What is the profit margin of the company?

With fundamental analysis you want to know what the basic factors (that are based on facts) are, that creates the value of an investment object. For example if you want to do a fundamental analysis on forex, you want to know what the factors are that increases or decreases the value of the British pound.