Fundamental analysis vs technical analysis

Technical Analysis vs Fundamental Analysis

That’s what the investors say value (or stocks) prefer fundamental analysis, which allows them to find “undervalued stocks” with the potential for an upward correction in their prices to realize capital gains.

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Other investors prefer technical analysis, which relies on securities’ behavior and historical data to predict the direction of a stock or security’s price. They study how supply and demand can affect the price and volatility of a security by studying charts.

Among the reference postulates of the supporters of this approach we find: History repeats itself “and” the market follows trends “. According to the statics, placed under the same conditions, the rates with different values ​​react in a similar way.

Finally, there are investors who commonly combine technical and fundamental analysis to gain a more holistic and comprehensive view of the financial markets. They start by analyzing the charts to know the evolution of an asset’s price before examining the company’s fundamentals.

In addition to the theoretical differences, it is important to remember that fundamental analysis aims at the long term, while technical analysis focuses on the short term.

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