What is the difference between technical and fundamental analysis?

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This post explains the difference between the basic and technological considerations so that you have the opportunity to choose this type of consideration, which is more suitable in general for your trader person.

Fundamental analysis

Basic research can be used to evaluate the performance of trading instruments such as promotions, indices, currency, and commodities. Certain traders, first of all, before realizing the resolution concerning the purchase or realization, wish to consider such financial conditions, as well as the Product of the state, the degree of lack of work, the profitability of companies, and the situation of the sphere. Without exception, all of this – thorough information.

For example, in stock trading, fundamental analysis can be used to evaluate factors such as company performance, news reports, the situation in the industry, etc Take, for example, a trader who uses fundamental analysis as part of his trading strategy. He is trying to determine where the shares of XYZ Airline may go in the coming days, weeks, or months. To do this, he needs to take into account factors such as the cost of oil, the number of tourists, and even political unrest that can affect travel in the industries where the airline operates. This is because an increase in the cost of oil will lead to an increase in the cost of flights for airlines, and political instability will hinder the development of tourism, which will ultimately affect the profitability and share price of the company.

What is the difference between technical and fundamental analysis?

Technical analysis

Companies that only look at value charts are called industry experts. They claim that everything that must be understood about a certain asset, be it an event, a pair of money, or a product, is previously shown in the value. Industrial specialists calculate their own operations and capital investments based on price trends, graphical modifications such as the head and the ramen, as well as the most precise indicators such as the usual sliding ones.

It is necessary to emphasize that for short-term trading most people are inclined to the use of charts. One of the obvious factors of this is that almost all traders find relatively small movements, and also, even though nowadays I may be exposed to a greater stream of new products than ever before in the first place, there are simply no significant new products, weekends during the day, to regularly affect the bazaars.

Choosing between technical and fundamental analysis

As well as a young trader, according to this or that road to follow, as well as this or that aspect functions more correctly as a whole? A respectable result is both! It is possible to receive (income) by applying either industrial or basic research, however, there is probably a heavenly half in which a joint image can provide an optimal result.

Of course, it is advisable to be in the direction of this, if significant thorough announcements are leaving. According to the last facet, even the most obedient traders are obliged to understand if various major banks, according to the whole society, announce profitable rates or other socio-political decisions. This, in combination with the publication of significant information, such as information on unemployment, can cause bazaars to move. Trading activity “together with the head in the sand” in the period of the release of this information can be expensive to limit, since the variability in bargaining often increases.

If the situation stands out significantly from this, then what everyone, without exception, was waiting for, for example, if profitable rates increase or the degree of absence of work is significantly earlier than predicted, in this case, in general, several texts have every chance to force the charts to carry out a completely different course. But traders have every chance to apply charts after the announcement, to realize whether the mood has changed, or the volatility activity was a five-minute miracle.

If, after a sudden announcement, the direction in the chart is restored, it means that the exchange does not consider this kind of news to be significant in any way. People tracking because of the charts are capable of having dignity here in front of these, who simply look at the announcements and are also sure that the exchange is obliged to respond differently, something that is often considered unsafe.

Risk management

Risk management – this is another area in which a combination of technological as well as thorough analysis can work. Financial announcements have all the chances to advise you that the trading approach to this or another economic asset is changing, but they will not necessarily give you a clue that your judgment about the trade is wrong. By using, for example, the classic places of videography, such as help and direction, a fundamentally-oriented trader can regulate the risk associated with the revision of their view of the exchange, if the final result someone turns out to be wrong.

The joint aspect is also able to help prove trends. If, for example, most of the waiting for an increase in the profitable rate, but it is not made, in this case, the unit of money of this state, as well as the principal, rolls back. If it does not stop increasing, in this case, this can talk about it, that there are other conditions and also the profitable amount is not in any way already significant. In this case, as well as the stock exchange responds to thorough announcements, all without exception is also able to be applied by a technological trader.

For this reason, most likely, it is logical that the final solution to this problem is not available, and the conflict between the basic and technological layout will continue.

As always, there is no gray-haired dog that would guarantee that I will always be fair. However, there is a large number of different and profitable trading strategies – in this case exclusively industrial, fundamental or a combination of them. Without exception, the problem is to find a methodology that suits your way of trading.

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