Fundamental Analysis Vs Technical Analysis

Fundamental Analysis Vs Technical Analysis


Fundamental Analysis

Technical Analysis

Fundamental analysis is a method of evaluating equities by attempting to measure the intrinsic value of a stock.

 

Technical Analysis the evaluation of securities by means of studying statistics generated by market activity.
Calculates stock value using economic factors, financial statements, demand forecasts, quality of management, earnings and growth etc Uses historical price movement of security to predict future price movements
Stock is bought When price falls below intrinsic value Stock is bought when the trader predicts that the trend might go up and they can sell the equity for a higher price in the near future
Generally used for Long-term investing approach Generally used for Short-term trading approach
Vision – looks backward as well as forward Vision – looks into the historical data only
Generally, the fundamentalist is a conservative who invests his funds for a long term. Long-term investors buy a high dividend paying stock and hold it for many years through market fluctuations. The technical analysis determines the short-term price movements of the securities. The technician is a trader who buys and sells securities for short-term profits. He does not believe in buying and holding of securities.
In fundamental analysis, there is no scope for finding out the past trend of share and also the fluctuations in the price trend. Technicians believe that past trend will be repeated again and the current movements can be used for studying the future trend. In other words, in respect of all securities there are cycles and trends which will occur again and again.
It helps identify undervalued or overvalued shares It is useful in timing a buy or sell order.
Used only for Investing in Stocks Used for Trading in Futures and Options
Investment Objectives Matters Profit/Loss Matters
Risk Level will decide trades Market Volatility decides trades
Large institutional investors like to buy shares in companies with good fundamentals. Used mostly for hedging and trading by retail traders

 

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