What is the difference between Fundamental Analysis and Technical Analysis?

Difference Between Fundamental Analysis and Technical Analysis

Investing in the stock market requires in-depth research, although various brokerage or financial firms help you to pick and select stocks. But it is imperative that you should also have the basic knowledge while investing in a market subject to so much risk and variations.

Fundamental analysis and technical analysis are the terms related to the stock market. Both are the types of analysis different in nature used by the investors and traders to study the stock market’s future trend.

These analyses are used to plan out strategy while investing in the stock market; both have got specific pros and cons. Let us understand both the terms properly and try to figure out the differences between the two.

Fundamental analysis helps investors to analyze stocks as per their intrinsic value. Fundamental analysis involves the study of the overall economy, industry condition, financial strength, and management of the company. Earnings, expenses, liabilities of any particular company comes under the fundamental analysis.

Technical analysis is the assessment that helps investors to predict the future price of the particular stocks or share in the active market. All these predictions are based on the previous performance statistics of the particular stocks.

Technical analysis helps investors to understand how the value of stocks will change in the coming days. Let us now move to the key Difference between Fundamental Analysis and Technical Analysis.

Difference between Fundamental Analysis and Technical Analysis

• Fundamental analysis helps to find out the intrinsic value of the stocks for making long term investments, while technical analysis allows investors to predict the future price of the stocks.
• The fundamental analysis depends on the company’s present status, including earnings, expenses, liabilities, etc. In contrast, technical analysis depends on the past performance statistics as well as the current performance of the particular stock.
• Fundamental analysis helps investors for short term trade, while technical analysis helps investors for long term trade.

If you are wondering about investing in the stock market, you should have a proper understanding of both fundamental analysis and technical analysis. However, the stock market is full of risks and needs in-depth research and an understanding of various market-related aspects.