Difference Between Fundamental And Technical Analysis Pdf

difference between fundamental and technical analysis pdf

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Investors use techniques of fundamental analysis or technical analysis or often both to make stock trading decisions.

When you decide upon Investing in the stock market, it is quite obvious you would be told to research and be prepared as much as you can, right? While you will be engrossed in the technicalities of this market, you will definitely come across two terms — fundamental analysis and Technical Analysis. To put it in simple words, these are two common methods that investors use for assessing their stocks. These two play a crucial in helping investors make a thoughtful judgement.

Difference Between Fundamental and Technical Analysis (With Table)

The two main schools of thought when it comes to market analysis is fundamental analysis and technical analysis. Though they are not mutually exclusive, most traders will fall into one category or the other. From the analysis standpoint, both fundamental and technical analysis provide their unique advantages and drawbacks. In this lesson, we will discuss the pros and cons of each of these analytical approaches. So, what is technical analysis?

Differences between Fundamental Analysis and Technical Analysis

Fundamental analysis is a methodology of stock valuation, which evaluates a stock based on its intrinsic value fair value. On the other hand, technical analysis is a methodology of stock valuation, which evaluates a stock based on charts and trends and predicts the future price of the stock. Both methods are used for evaluating the stock and prediction of future stock prices. Still, while fundamental analysis focuses on the intrinsic value of the stock, technical analysis focuses on the past trend of the price movement of stock. Martin Schwartz , a successful wall street trader, gained reputation and wealth due to Technical Analysis. Whereas, Jim Rogers , a popular investor, owes his success to fundamental analysis.

Absolutely zero maintenance charges. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit. For more information, visit our disclosure page. There are two schools of thought that take precedence for analyzing stock markets — fundamental analysis and technical analysis.

Difference between Fundamental and Technical Analysis

Fundamental and Technical analysis are terms used in the share market trading. The value of assets is affected by both macroeconomic and microeconomic factors. This value acts as a standard measure enabling the trader to understand whether the security is being undervalued or overvalued.

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Fundamental Analysis studies all those factors which have an impact on the stock price of the company in future, such as financial statement, management process, industry, etc. It analyzes the intrinsic value of the firm to identify whether the stock is under-priced or over-priced. On the other hand, technical analysis uses past charts, patterns and trends to forecast the price movements of the entity in the coming time.

Fundamental Analysis vs Technical Analysis

Difference Between Technical and Fundamental Analysis

The following are some of the differences between fundamental and technical analysis. Fundamental Analysis : It seeks to forecast stock prices on the basis of economic, industry and company statistics. However, the most important variables considered in deciding stock prices are earnings and dividends.

Both Technical and Fundamental analysis are techniques used by investors globally to make stock related decisions. They are however different in several ways; fundamental analysis seeks to determine the intrinsic value of stocks using relevant data while fundamental analysis uses the historic market activities and trends to predict future price expectations. This technique can be used to analyze several trading instruments including shares, indices, currency rate and commodities. When trading shares, fundamental analysis can be applied to evaluate certain factors such as the performance of a company, news and environmental conditions. A good example would be an investor who wants to determine whether he or she should purchase shares from company XYZ which is in the airline transport industry.

Technical Analysis vs Fundamental Analysis In The FX Market

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