A lot of traders especially the beginner traders are being confuse about the differences between the fundamental and technical analysis. Here we explain the difference between fundamental and technical analysis, and discuss how to determine which investing approach is best for you.
5. www.dhanashriacademy.com
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.
Technical Analysis:
It mainly focuses on internal market data.
7. www.dhanashriacademy.com
Fundamental Analysis:
It seeks to predict long-term values of securities.
Generally, the fundamentalist is a conservative who
invests his funds for a long term. Long-term investors
buy a high dividend paying stock and hold it for many
years through market fluctuations.
Technical Analysis:
The technical analysis determines the short-term
price movements of the securities. The technician is
a trader who buys and sells securities for short-term
profits. He gives importance to total returns, i.e., the
realized price less the price paid, plus dividend
received.
9. www.dhanashriacademy.com
Fundamental Analysis:
The fundamental analyst estimates the intrinsic value
of shares and purchases them when their market
price is less than the intrinsic value. He sells the
shares when the market value of shares is more than
the intrinsic value and earns profit. Thus, he works on
long-term basis.
Technical Analysis:
The technician believes that there is no real value to
any stock. According to him, stock prices depend on
demand and supply forces which in turn are governed
by rational and irrational factors.
11. www.dhanashriacademy.com
Fundamental Analysis:
In fundamental analysis, there is no scope for finding
out the past trend of share and also the fluctuations
in the price trend.
Technical Analysis:
Technicians believe that past trend will be repeated
again and the current movements can be used for
studying the future trend. In other words, in respect
of all securities there are cycles and trends which
will occur again and again.
12. www.dhanashriacademy.com
Technical Analysis:
Under technical analysis, charts and tools are used to
compare various price movements. The technicians
view price changes and their pattern mainly through
price and volume statistics and tools such as Dow
theory, Elliot Wave theory, pattern identification
moving averages, advance or decline, charting styles,
odd lots, short selling, put or call ratio, relative
strength of indicators and Fibonacci levels.
16. www.dhanashriacademy.com
Fundamental Analysis:
The fundamental analysis carefully studies the
financial statements, demand forecasts, quality of
management, earnings, and growth. Then they judge
the prices of securities. Thus, the fundamental
analysts are making decisions based on their own
(subjective) opinions.
Technical Analysis:
It listens to what the market has to say. So, the view
of the market is the most important factor in
determining stock prices.
18. www.dhanashriacademy.com
Dhanashri Acedemy is a well-known
share market courses and training
institute in Mumbai.
We are conducting courses since
2008 and our teaching skills of share
market are gain by students from
past 5 years from which they have
gain maximum benefits and profits.