3 Types of Market Analysis, fundamental to profits

We are in the market for money. To maximize your gains and reduce losses to its minimum, traders need to apply “analysis” to each decision-making. 

There are 3 types of market analysis:

1. Fundamental Analysis 

2. Technical Analysis

3. Sentiment Analysis

There is no certainty which one is more important. no doubt you can boost your chance to profits if you do your research in aforementioned analyses.

◆ Fundamental Analysis

Fundamental analysis is about examining factors that may affect the supply and demand of an asset.

When it comes to Forex market, the factor could be economic, social, and political forces. Other factors such as GDP, inflation rate, and so on hold importance for Forex and commodity traders as well.

However, when it comes to crypto market, people find it more complex to evaluate, which, unlike other assets, does not generate revenue, create numbers or have a balance sheet.

As a result, traders developed a new set of metrics which apply to crypto currencies, such as

1. Unique Addresses

2. Transaction Value

3. Mining Cost

For example, if we see the “Unique Addresses” is going down, chances are the value of network will go down.

From Blockchain.info

Of course, that is not the whole picture. We will later on dig into the indicators above and other factors that affect crypto, forex and commodity market.

◆ Technical Analysis

Technical analysts believe that what happened in the past will influence future market movements.

If all the factors have been reflected in the price, then theoretically the “candle stick chart” is all you need to make a trade.

Support and resistance levels are used to determine whether to buy or sell an asset. 

For example, the price had nearly trouble breaking these levels, which gives us an alert when the future prices come near the position.

Given the high volatility experienced on cryptocurrencies in the past few years, T.A is quickly growing in the field of digital asset trades.

However, T.A does not offer you a full picture, unless combined with Fundamental Analysis and –

◆ Sentiment Analysis

The scenario must be quite familiar: you have done your homework in fundamental and technical analysis, which shows an up-trend, somehow, the asset remains down. 

Why?

The reason: Panic? Bad mood?

It is called “sentiment”. Although subjective, it can move the prices away from its fundamental values. 

These three analyses are intertwined with each other. Fundamental factors can affect sentiment, which is reflected on the candle stick chart.

We will in later chapters elaborate on these 3 analyses for you. Stick with us, to be a better trader!