Do you happen to be someone who is just about to get started with trading digital currencies? Well you may be relieved to find out that there are plenty of others who plan to do the same. Most of them do not have any idea of where to get started, which is why learning some essential fundamentals would be critical for your and everybody else’s progress. Most experts will tell you that performing your due diligence is crucial if you want to start investing and earn sizeable amounts of profits.
Some of you might not be aware of this but crypto currencies can be quite volatile at times. Of course, they are famous for their high profitability but there can be times when investing in them could be risky. Therefore, it is critical to determine whether or not the transaction that you are planning to make would be safe or not. How can you find that out? Well there are several tools and techniques that a lot of experienced traders tend to resort to in order to determine the right and wrong times for trading and investing.
You might be surprised to find out that there are various concepts that could offer you a lot of help to identify projects that could be highly profitable. Once of those concepts happens to be fundamental analysis. All of the trading experts at EZDSK pitched in their opinions in order to help everybody reading this with their online crypto currency investing and trading journeys. So without further ado, here is a comprehensive rundown of what you should prepare yourself for and the things that you should no in order to have a smooth and profitable journey.
EZDSK – A Broker Dedicated to Cryptocurrency Trading
Fundamental analysis happens to be a popular approach that a large number of investors tend to use in order to determine a tradable asset’s accurate intrinsic value, especially when it comes to crypto currencies. You could say that it is a comprehensive evaluation which people perform considering the factors that could affect the entire value of an asset in the long run. In addition, analysts also tend to consider the economic as well as quantitative and qualitative indicators to receive a basic picture regarding the asset value of a particular crypto currency.
Believe it or not, this method has been successful in helping out a variety of trades who happen to be interested in making investments to get gains in the long run. Furthermore, it also helps investors in picking up the correct assets, and assists them in finding out the correct prices and values of a particular digital currency that they are interested in trading or investing.
QUALITATIVE AND QUANTITATIVE FUNDAMENTAL ANALYSIS
Fundamental has a quantitative aspect and a qualitative aspect. The quantitative part mostly is associated with the metrics or the factors that people can express or measure in numerical terms. Surprisingly, some of these factors also consist of coin and price supply.
On the other hand, qualitative analysis involves various assessments based on a variety of intangible factors that are capable of influencing an asset’s value. It would be fair to say that it is a subjective and judgment based technique of analyzing things. Community engagement, management enterprise, research and development, and reputation happen to be some of the examples.
These two different technique are utilized in unison in order to gain insights that could help investors compare various project operations and make well informed decisions that would favor them in the long run.
It is also worth noting that there isn’t actually a particular approach that would help you conduct a thorough qualitative and quantitative fundamental analysis regarding crypto currency projects. That being said, you will come across a variety of elements and features that would help you pay extra attention when analyzing currencies and trade potential.
UNDERSTANDING INTRINSIC VALUE
Intrinsic value is also referred to as fundamental value. To make things simpler to understand, it is essentially an assets estimated value based on the quantitative as well as the qualitative factors. By gauging a crypto currency’s intrinsic value, investors and analysts can determine whether or not a particular asset is over or undervalued in the present market.
EXAMPLE FOR UNDERSTANDING INTRINSIC VALUE
Let us say that John is interested in a particular token or coin. However, he has come to hear that crypto currencies are quite volatile these days. Therefore, instead of depending on the hype created in the market for making an investment related decision, John makes his mind to perform detailed research in order to determine whether or not the project that he is looking at is profitable.
John has undivided access to a variety of information sources in order to conduct the fundamental analysis. It could include things like white paper, project websites, community channels, and press. John also chooses to begin with the white paper of the coin. After comprehensively going through it, John determines that most of the things that he went through were hard to comprehend and too technical for him. Therefore, he visits the online forums and websites of the particular project dedicated to analyze the assets. They could help him link with the right community channels and white paper.
After making use of all of the materials that he could possibly get, John realizes that the coin that he has been resorting to has been very weak in the industry and is not providing solutions to any of the problems that the public is facing. It does nothing more than merely collecting money from less experienced and susceptible investors.
Therefore, John takes some time to study another asset and fortunately for him, it is looking promising. Firstly, the technology that it is linked to is quite unique and several reputable institutions have formed alliances with it. He later on also finds out that the particular digital coin has been experiencing a massive value rise in the past few years, which is why decided to invest a significant chunk of his money in the project which could interest various investors and traders in the near future.