Fundamental Analysis

Fundamental analysis serves as a cornerstone in both investing and trading strategies, albeit with differing approaches.

In investing, fundamental analysis focuses on determining the intrinsic value of stocks through methods such as assessing bookkeeping records and evaluating economic indicators. Investors delve into company financials to gauge profitability and growth prospects, aiming to identify undervalued assets for long-term investment.

For day traders, fundamental analysis takes on a different dimension. As minute-long trades dominate, accounting and company numbers hold little relevance. Instead, day traders rely on real-time market information and sentiment. Key fundamental tools include premarket news, news calendars, and monitoring global market conditions, such as geopolitical events or economic crises, which can swiftly impact market sentiment.

Few Examples:

If you day trade stocks, you can strategize around Initial Public Offerings (IPOs), which occur when a company offers its shares to the public for the first time. These events often create significant volatility and trading opportunities as investors speculate on the company's future prospects.

Alternatively, a major geopolitical event, such as a conflict affecting crude oil production, can prompt day traders to focus on trading crude oil based on news sentiment and market reactions. These events can lead to swift price movements, offering opportunities for quick profits for savvy day traders.