THE INDUSTRY

Understanding the circumstances of the industry the target company belongs to is another cornerstone of qualitative analysis. Even the strongest company can still see its stock price decline if the industry itself is in dire straits. A robust company’s value may fall less than a weak company’s, but both will see some level of convergence to a new industry-wide benchmark.

While plenty of quantitative data exists to help with industry-wide fundamental analysis, qualitative analysis can often provide a quick and dirty insight into the direction of the industry. Quantitative studies may be released weekly, monthly, or yearly, but for day-to-day movements, which are crucial in binary options, a more qualitative approach may need to be taken.

Much of the broader assessment of an industry is also largely qualitative, and investors who take the time to ask a few simple questions may have a much stronger concept of how a option will perform. For example, the growth potential for an industry may be apparent by investigating media buzz about products within the industry, its prevalence in popular culture, and simple personal experience, such as spotting certain products more and more frequently on the subway. While these assessments may eventually be realized in a quantitative study, recognizing them early through more subtle cues can put the investor in a much stronger position.

Looking at barriers to entry into an industry is an excellent step to take when analyzing a new company’s chances of succeeding in the marketplace. Some businesses lend themselves to being competitive no matter how much entrenched competition exists. Others may rely on extensive infrastructure, established brand recognition, or other factors which offer a massive advantage to established companies, making new companies entering the space unlikely to succeed unless they have a particularly innovative approach or some sort of ace up their sleeves.