Fundamental analysis is one of the true cornerstones of investing. It looks at what causes price to move up or down and uses this to anticipate and profit from future price moves. It can be used to analyze a national economy by examining areas like growth, employment and inflation. It can be used to analyze an individual company by examining its financial statements like assets, liabilities and earnings as well as its management and competition.
Fundamental analysis can also be applied to whole industries by examining the drivers of supply and demand. There are many different fundamental trading and investment strategies and most of them try to determine the fair value of an instrument by analyzing the underlying drivers of price. If the actual market price of an instrument differs from this fair value, it will eventually gravitate towards it, as long as none of the fundamental drivers change. Fundamental traders also look at price action, but technical analysis is usually limited to support and resistance.