Importance of fundamental analysis in Stock Trading

Fundamental analysis is a stepping stone to investing. If we have a basic knowledge about fundamental analysis so we can take right decision of investment. Many expert analysts generate Stock Future Tips based on the fundamental analysis.

What is fundamental analysis?
Fundamental analysis is a process of analysing a security in order to determine, its share value, by economic, financial, non-financial other quantitative and qualitative factors.

The sources of information for fundamental analysis are: 
1. Balance sheet
2. Profit and loss statement
3. Annual reports
4. Announcements by the company
5. Industry specific news

Before we knows about importance of fundamental analysis, we should know what is the right way of fundamental analysis:

1. Earnings per share (EPS)
This will tell about stock profitability. If we compare other company and see the growth of the company, we can make our judgement based on it.

2. Return of equity/Assets
Return of equity and return of assets both are important ratios. This helps us to know how to make profit in any company and earn money.

3. Price of book ratio
It is other important ratio it is used to compare companies’ market value to book value.
These three ways of fundamental analysis help us to do investment in any company and help to choose right stocks and we can take right decisions about investment and get profit.

Importance of Fundamental Analysis:
All information is available in market but an investor should be alert about market conditions and have an updated mind. We can only make judgments by comparing with others. Fundamental analysis provides reliable information and it's very important for long term investments. It is a good source of information and it is more valuable for investors.

When we start investing, we don't know how to buy and sell stocks and how to manage the biggest risks in stock market. But when we want to know perfectly how to buy or sell then fundamental analysis will help us for financial growth. Fundamental analysis is an important part of stock market investing strategy. Fundamental analysis is beneficial for investors, as an investor considers the fundamentals of the company before investing money. Fundamental analysis can prove to be extremely valuable, but it should be approached carefully. As an investor, one should try to understand the structure of the industry.

Fundamental analysis used three categories of data- 
-- Historical data
-- Publicly known information about the market
-- Private information

All the information is available for free and is known to all. All the investors should use this information and get profit. Fundamental analysis makes a good marketing strategy for investors.

Fundamental analysis tells you to study to the three principal financial statements- 
-- Income statement
-- Balance sheet
-- Statement of cash flows

Income statement calculates the company's income and profit.

The balance sheet compares a company’s assets.

The statement of cash flows elaborate the money flow

As an Investor you should look for information such as management communication and company expectations.

Advisory firms like TradeNexa generate sure Stock Future Tips based on the fundamental analysis and Technical analysis.