While analyzing a stock (or commodity or currency), using fundamental analysis there are two basic approaches one can use which are bottom up analysis and top down analysis. Bottom up analysis means looking at the details such as earning, if we are talking about a stock, first and then working one's way up to the larger picture by looking at the things such as the industry of the company who's stock you are trading and then finally the overall economic picture.
Top down analysis on the other hand means looking at the big picture things such as the economy first and then working one's way down to the details such as earning if we are talking about a stock.
Most of the traders concern about the US economy as its the strongest economy till the time and US currency is the base currency for foreign exchange market. Besides, the natural resources, labor force, productivity, financial system etc. are the strong components to make the US economy the dominant one.
In fundamental analysis, we have to look for the different components of economy such as :
1. Federal Reserve System of US
2. FOMC
3. Business Cycle
4. Interest rates
5. Government bonds, spendings, tradings etc.
6. Inflation
7. Economic releases that move market which are GDP, unemployment rates, personal consumption, non-farm payroll, retail sales, ISM manufacturing index, Consumer price index (CPI). Producer Price Index (PPI), etc.
8. Different economic datas regarding production and consumption of different commodities.
Top down analysis on the other hand means looking at the big picture things such as the economy first and then working one's way down to the details such as earning if we are talking about a stock.
Most of the traders concern about the US economy as its the strongest economy till the time and US currency is the base currency for foreign exchange market. Besides, the natural resources, labor force, productivity, financial system etc. are the strong components to make the US economy the dominant one.
In fundamental analysis, we have to look for the different components of economy such as :
1. Federal Reserve System of US
2. FOMC
3. Business Cycle
4. Interest rates
5. Government bonds, spendings, tradings etc.
6. Inflation
7. Economic releases that move market which are GDP, unemployment rates, personal consumption, non-farm payroll, retail sales, ISM manufacturing index, Consumer price index (CPI). Producer Price Index (PPI), etc.
8. Different economic datas regarding production and consumption of different commodities.
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