Fundamental Analysis vs. Technical Analysis

Fundamental Analysis vs. Technical Analysis

The Indian stock market is getting every investor’s attention. In fact, the stock markets have been proving to be great wealth generator. Moreover, there are many stocks picking methodologies through which investors can pick the right stocks. Furthermore, such methodologies are either fundamental analysis or technical analysis of stocks. Both of the concepts are different from each other.

 

Let us first understand the meaning of both the terms.

Meaning of Fundamental Analysis

Fundamental analysis is an approach to determine if a stock is good for investment. In this approach, the calculation of the intrinsic value of the stock, its fundamentals, the future prospects, the economic factors and many more things are analysed. To put it another way, fundamental analysis tries to determine the price movement of the shares in the long term on the basis of news flows and economic data available.

 

Also View – Fundamental Analysis of Stocks

 

Now, let us see the meaning of technical analysis

Meaning of Technical Analysis

Technical analysis is picking the right stock after studying the market statistics. In fact, the whole concept of technical analysis depends upon the price volume action. In addition, the factors that play a significant role in stock picking through technical analysis include the historical price of shares, trading volumes, industrial trend, etc. To conclude, the technical analysis looks to tap the price volume opportunities.

 

Also View – Technical Analysis of Stocks

 

Let us now understand the difference between fundamental analysis and technical analysis.

Fundamental vs. Technical Analysis

The fundamental analysis and technical analysis are different methodologies. They follow a different approach and selection of stock is different. Let us see the major differences that separate the two concepts.

 

  • Firstly, fundamental analysis is for long-term investors only. On the other hand, technical analysis is for short-term In case of fundamental analysis, the intrinsic value of the company is worked out to determine the value of the company in the long run. Whereas, the technical analysis studies the charts of the stocks and mostly for traders.

 

  • Secondly, the investor must know the time horizon of the investment before selecting any methodology. This is because the charts in case of technical analysis may change in a short span. On the other hand, the fundamentals of the stock may stay the same for next few years. Therefore, the investor must know the duration of investment before investing.

 

  • Thirdly, the investor must be clear about the goal of his investment. If the investor aims to flip the stock in short time, technical analysis is for them. On the other hand, if the investor aims to remain in the same stock for years, fundamental analysis is for them.

 

Now the important question that crosses our mind is can the fundamental analysis and technical analysis by used together. The answer is yes. Both the methodologies can be combined together in form of techno funda or funda techno to pick the right stocks.

 

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What is Techno Funda or Funda Techno?

Techno Funda or Funda Techno is technical analysis and fundamental analysis methodologies put together to find a stock. In fact, when these two techniques combine, the investors are able to select a script considering both the analysis.

 

The important question here is how Techno Funda or Funda Techno strategy works. In this segment of the article, we shall have a look at the functioning of this technique.

How Techno Funda or Funda Techno Works?

When these two techniques are put together, the analysts are able to find a perfect stock. By using the fundamental analysis technique, the investor will be able to find a stock that is trading at a lower valuation. Similarly, by using the technical analysis technique, the analyst shall be able to determine the right entry and exit price for the stocks. Therefore, the investor knows all the economic parameters along with the entry and exit points.

 

However, often the trader looks to invest in a stock that shows technical breakout after fundamental improvement. For example, the trader may invest in the stock after a technical breakout due to good results. Therefore, the investment in such case is on the basis of both technical as well as fundamental analysis.

About Us

Nifty Trading Academy aims to educate the investors in the stock market. In fact,we provide the investors with education on technical and fundamental analysis of the stocks. Moreover, the investors can become successful intraday traders. In addition, the investors can select the right stock for long-term investment. Just join our academy and learn the important concepts about the stock market. If you have any queries you can reach us via phone or email. We will be glad to serve you.

 

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Hitesh Dixit
I am a passionate, active Trader and Investor in Stock Markets and the founder of this blog.My aim is to help people,especially beginners,take informed decisions regarding Trading,Investing and Personal Finance by learning basics.