How to use fundamental analysis as a trader.
A good trader is one who does research well on the market before trading, the attention paid to the analysis or research as the case may be will determine a lot in the direction in which the trade will go. This analysis is called Fundamental analysis.
Fundamental analysis is a method used by both investors and traders to analyse the internal and external factors that affect assets, and this is done to determine if the particular asset is overvalued or undervalued. When the analysis is done right, it helps traders to formulate a strategy that will help in making trading decisions that will yield profits.
A deep dive is taken into a financial asset when a fundamental analysis is carried out, all important information that is available is looked into. The real issue here is that most traders, especially newbies, do not know where to look, or when they are not looking at the right things.
The first thing to do is to open a trading account with a top and secured exchange like OKEx, securing your funds on the right platform is the basis for all traders. Then there are some vital information/factors about a particular asset that should be considered before opening trades.
This is very important, as the whitepaper tells all there is to know about a project. Traders and investors are always eager to read this and there are major things to note:
a) If an open source technology is used.
b) The roadmap, if it has been followed so far and the upgrades and new features to come.
c) The utility/use-case of the asset.
d) The supply and distribution scheme for coins or tokens, one must be aware of the amount in circulation and the ones locked.
The team members should be looked into, they should have a LinkedIn account or a place where their past projects are listed. The number of successful projects and the number of failed ones says a lot about the chances of the current one getting successful.
It is wise to check the GitHub repository as it should be active, and the number of contributors should also be considered. A project having many developers contributing means it has a better potential.
One needs to read articles and blogs written about the project, also check out tweets and Reddit posts. The point is to make a trading decision and not to grow emotionally attached, special care should be taken as there are people out there creating FUD (Fear Uncertainty and Doubt)
The competitors of a project can be identified through the whitepaper, those offering to solve the same problem as the asset. The trader needs to check if the new asset is better or just a replica of the existing competitor(s)
Tokenomics and initial distribution
Some projects create tokens but these tokens do not have utility or use-case of any sort, it is the job of the trader to know more about tokens and their utilities. It is seen as a red flag when very few wallets hold a large amount of a token, this is considered as a risky investment.
It is to be noted that Fundamental Analysis is needed alongside Technical Analysis, mastering the two makes trading a lot easier. Fundamental Analysis is just needed to be done before going in on an asset. OKEx provides a lot of assets to trade with, and there is liquidity for every asset traded. Open an account to get started: https://rebrand.ly/tw-signup
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