Fundamental Analysis vs Technical Analysis

 What is Fundamental Analysis ?

Typically, Fundamental Analysis is used to find out whether a company is stable, solvent, liquid or profitable enough to make an investment or not. 

Fundamental Analysis can help investor to choose best possible investment opportunities. Fundamental analysis study everything from the financial strength to the management of individual company.

In fundamental analysis, Analyst uses different financial statements like income statement ( Profit & loss statement), Balance sheet and cash flow statement to find out whether the company is in profit or loss. Earnings, Expenses, assets and liabilities are all comes under research of fundamental analysis of a company.

Technical Analysis 

Technical analysis is a traditional way of analyzing companies without seeing any financial statement which shows historical price data which we can easily on the chart of particular security ( Here Security is referred as a company). Technical analysis focuses on price and volume of security.

Technical analysts believe past trading activity and price changes of a security can give a valuable information which can clearly help us to make an investment decision.

Technical Analysis can be applied to any security with historical trading data. This includes equities, futures, options, commodities, etc.

Technical Analysis consist of following factors :

  • Market trends
  • Volume Study
  • Support and Resistance Areas
  • Candlestick Patterns
  • Chart Patterns
  • Indicators like Moving averages, Relative strength index (RSI)

Here take a look at all the above items on the real time chart of Nifty 50 index.


Take a look at these basic terminologies and in the next blog's we will cover all those terms in easy way as possible.

Happy Monday...!!!

 

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