Home » Blog » Investing » Stock Market Basics » Fundamental Analysis vs Technical Analysis

Fundamental Analysis vs Technical Analysis

Stock Analysis

The one and only primary objective of investors is to earn maximum profit. we can generalize investment mainly in two ways, long-term investment and short-term investment. Before investing one should analyze market movements, price fluctuations, and most importantly to understand the relation between buyers and sellers. In order to analyze the market in a proper way, there are two basic approaches, fundamental and technical. There is a clear distinction between fundamental analysis and technical analysis. So fundamental analysis vs technical analysis is quite significant in this context.

But before the further discussion, it’s necessary to give a brief overview of fundamental and technical analysis separately.

When it comes to long-term investment, it is advised to go for fundamental studies. Fundamental studies consist of an overall economic condition, company’s earnings, expense, asset, liabilities, economic events. Investors mainly calculate the stock value using these kinds of economic factors, as we mentioned above.

Oppositely when investors approach the market from a short-term view or want to go for intraday trading, it is suggested to follow technical analysis. Analyzing price movements and the volume of the stock and focus on the chart pattern, are some of the basic characteristics of technical analysis.

Fundamental Analysis vs Technical Analysis

So when it comes to making a difference between fundamental analysis vs technical analysis, fundamental analysis focuses on the tangible and intangible aspects of the company to figure out the accurate value of the stock while technical analysis focuses on the internal market sentiments, price movements.

Fundamental prediction is beneficial mainly for long-term investing. The long-term investors hold their investment for many years through market fluctuation, and technical analysis is beneficial mainly for the short-term trader when they buy and sell stock within a short time span.

In technical analysis, assumption plays a vital role. But in fundamental analysis, there is no such clear assumption.

The fundamental analysis mainly consists of various studies, such as financial statement, earnings growth, demand forecast, etc, but technical analyst listen the market, the movements of the market are the most determining factors to predict stock prices.

Fundamental Analysis vs Technical Analysis

So these are some of the basic distinctions between fundamental analysis vs technical analysis. It is a vital topic in case of investing. The investors should have some clear idea about these two main analyses, according to their requirements.

Leave a Reply