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Technical vs. fundamental analysisThe primary difference can be summed up in terms of both the underlying philosophy, and the data studied.

Fundemental analysis is concerned chiefly with discovering asset values. The data relied upon includes off exchange sources such as balance sheets, income statements and supply and demand statistics.

Technical analysis on the other hand, is concerned chiefly with the timing of buy and sell decisions. The data studied is generated exclusively by the exchanges.

Where does investor sentiment fall within these two definitions? If the sentiment data is derived from options data, then it would fit the definition of technical analysis. If on the other hand the data was generated by opinion polls, then it would not fit the definition of technical analysis. Nor would it be considered fundamental analysis either. It would more properly and simply be defined as "sentiment analysis."

While there is some debate over whether off-exchange data (e.g. astrological data, dividends, opinion polls, etc.) properly belong under the definition of technical analysis, none of the main organizing bodies for technical analysis have ever rendered an official, public opinion on this question.

According to noted technical analyst Daniel Chesler, CMT --

"Technical analysis is the forecasting of markets through the study and analysis of data generated exclusively from the buying and selling of financial instruments. It is part science and part formalization of trader intuition and experience. Any market for which there is a regular, transparent transaction history is a candidate for technical analysis. Planetary cycles, opinion polls, fundamental, monetary and economic data as well as any data not specifically generated from the buying and selling process, are not a part of orthodox technical analysis."

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โˆ™ 2010-10-01 10:26:47
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Q: How does technical analysis differ from the fundamental analysis?
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Related questions

What is the difference between fundamental and technical stock analysis?

Fundamental analysis refers to analyzing the company's products, its market share, its management, its strategy, its financial and other related information. Technical analysis only looks at the financial charts of the company's stock and not its underlying fundamentals.

What is the difference between technical analysis and fundamental analysis?

Fundamental analysis is the art of looking at a company business history such as earnings, dividends, bisness sector, etc to try to predict the future direction of the company's stock. Technical analysis is looking at the chart of the company's stock and trying to predict the direction of future movement based on technical analysis without regard to the fundamentals or business of the company.

What is the meaning of forex strategy?

Forex strategies are used to make a profit from trading currencies on the forex market. Mostly they are divided into 2 categories: strategies based on technical analysis and strategies based on fundamental analysis. Technical analysis involves trading charts while fundamental analysis is used by traders who want to base their trades on the events that happen in the global economy.

Which is the best forecast website for Forex?

There are many sites that give you technical and fundamental analysis on the forex markets.

What is market sentiment indicator?

Whereas the TWhereas the Trend, Overbought/Oversold, and Volatility gauges are based on Technical and Fundamental analysis, the Market Sentiment indicator is unique in that is it is based solely on sentiment or what other traders 'feel' about the market.rend, Overbought/Oversold, and Volatility gauges are based on Technical and Fundamental analysis, the Market Sentiment indicator is unique in that is it is based solely on sentiment or what other traders 'feel' about the market.

What is Forex fundamental analysis?

Forex fundamental analysis is about identifying and measuring the factors that affect the fundamental worth of financial instruments.

What is Fundamental and Technical analysis?

Fundamental and technical analysis are two different methods used to evaluate the merits for purchasing the stock of a company. Fundamental analysis includes analyzing a company's financial statements including the balance sheet, income statement, and cash flow statement. Potential investors in a stock will also look at fundamental factors such as the company's market share, competitive advantages, quality of management, sales trends, projected earnings per share growth, and macro economic factors affecting the industry that the company operates in.Technical analysis involves looking at stock chart patterns to discern the future movement of a stock's price. Proponents of technical analysis argue that fundamental factors are already reflected in a stock's chart pattern. Both methods of stock analysis have merit and many analysts combine both techniques when evaluating the investment merits of a particular company.

Which type of forex trading is better technical or fundamental?

Fundamental in the long term, technical in the short term.

What is the main advantage of fundamental analysis of stocks over technical analysis?

Fundamental analysts like to look at the cash flow statement, balance sheet, and income statement of a company to determine that company's intrinsic worth. Basically, if the price of the stock is below the intrinsic value, it's a good investment. A technical analyst, on the other hand, would waive the in-depth look into the company's foundation, believing that all the worth of the company is in the stock's price.

Fundamental Analysis vs. Technical Analysis?

There are generally two ways that investors perform analysis on stocks they are considering for investment. These two disciplines are known as fundamental analysis and technical analysis and they come at the same problem from two distinctly different angles. First there is the traditional route of fundamental analysis. This is performed by measuring all kinds of metrics regarding the performance of the underlying company. These metrics are typically represented by various ratios or derived by formulas. They include things like looking at the company’s discounted dividends (using the discounted dividend model or DDM), return on investment (ROI), price to earnings ratio (P/E), return on equity (ROE), free cash flow (FCF), return on assets (ROA), price to book value (P/BV), weighted average cost of capital (WACC), as well as a SWOT analysis of the firm. (A SWOT analysis is an in-depth analysis of both internal and external factors that may affect the long-term performance of a firm. It is named after the four factors of Strengths, Weaknesses, Opportunities, and Threats.) Fundamental analysts also take a good look at the management team that is in charge of the firm. On the other side of the equity analysis spectrum lie the technical analysts. They are sometimes called chartists due to their heavy reliance on stock charts to make investment decisions. Technical analysis assumes that asset prices already have all available information that fundamental analysts follow funded into their prices and therefore the best use of an analyst’s time would be to identify certain patterns in the trading for an individual asset. Technical analysts make use of such things as trading volume levels, candlestick charts, moving averages, Bollinger bands, support and resistance lines, and momentum oscillators to inform their decisions. Most investors benefit from a combination of both fundamental and technical analysis, though some choose to rely solely on one or the other and staunchly oppose the other camp’s viewpoint.

What is Top Down Fundamental Analysis?

Top down: you look at the market as a whole (principal economic factors and data) them you narrow down until your industry etc. etc.Fundamental: you look at the principal ratios of a company compared to the industry. You look at the level of debt, profitability etc. etc. Basically you look at how the company performs in terms of financial performance. Fundamental analysis is the opposite of technical analysis which is just looking at trends and mathematical expression to forecast what is going to happen with a stock.Top down fundamental analysis is just the 2 combined.hope this will help !Cheers,

What is fundamental analysis?

Concerning investing fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. More on fundamental analysis can be found at

Can stock fundamental analysis help my portfolio?

Stock fundamental analysis is insight on the opportunities of a potential stock. It is an in depth examination of a companies profile. Stock fundamental analysis can be beneficial due to the fact that it can give potential investors a better informed decision in their stocks.

What are the duties of a stock screener?

Help people to scan stocks with a good filter with good fundamental and some technical analysis about the stocks people want. It offered free charting with the ability of drawing lines.

Technical Analysis?

When investors analyze their equity investments they tend to complete one or another type of analyses. These two different kinds of analysis are called technical analysis and fundamental analysis. Some investors rely solely on one or the other type, while some do a bit of both and hope to come out on top by employing technical trading tools and a sound fundamental analysis of the financial position of the underlying company. In this post I’d like to talk a little bit about technical analysis. Technical analysts relay heavily on charts and graphs. In the past, they used to be called “chartists” because of their seeming over-reliance on market charts and graphs. It’s true that a lot of charts and graphs go into technical analysis, but it’s more than just looking for patterns in chaos. Underneath the hood of technical analysis lies four main assumptions that actually lend it some credence. 1. Market prices for assets are determined by supply and demand. 2. All thought about the pricing of an asset, both rational thought and irrational thought, are already reflected in the asset price – including that of the fundamental analysts who study the financial statements of the underlying company. 3. In general, asset prices move in trends. 4. Trends will shift due to shifts in supply and demand and these shifts themselves are detectable in the market. Technical analysts rely on tools with arcane names like momentum oscillators, support and resistance lines, Bollinger bands, moving averages, candlestick charts, and trading volume levels; all of which use these four assumptions as their underpinning. There are, of course, those who claim that the only way to truly analyze an equity asset is to perform a thorough fundamental analysis of a company’s financial statements and use financial modeling techniques. These contrarians argue that technical analysts are wasting their time looking for patterns in the chaos, like someone seeing the Virgin Mary in their breakfast toast. The question of which camp is correct will probably continue to be one of the ongoing debates in the financial field for some time.

Where could one find a Forex technical analysis?

A Forex technical analysis can be found at Investopedia, Dailyfx, and Forex Cycle. These places can provide both an analysis as well as basic information.

How do you learn about stock technical analysis?

A website you can use to get a grasp on stock technical analysis is Read the FAQ to get an understanding of the site's layout.

What is technical analysis software?

TAKIT Professional, the ultimate technical analysis software for Day trading. It does all the analysis job for you and show the best opportunities to trade on intraday.

Which kind of stock market analysis focuses on the a company's traits such as revenues and earnings per share?

Fundamental analysis

What is called technical analysis?

Technical Analysis is not a game. It is the scientific way to win Stock Market.Meet TAKIT Professional, the ultimate technical analysis software for Day trading. It does all the analysis job for you and show the best opportunities to trade on intraday.

Where can I get more info on benefits of a stock fundamental analysis?

The bottom line, how much money an investor makes, is the sole value of a stock fundamental analyst. The best tool you can use is stock fundamental analysis. Many investors use this tool as their sole analysis for their investment. Benefits are wide open to anyone that can advise an investor on this tool alone and the investor makes money.

Fundamental Analysis?

In my last post I talked about technical analysis, that school of equity analysis that holds to using charts and graphs to ferret out patterns in market movements and take advantage of trading trends. On the opposite side of the debate on equity analysis strategy lies the fundamental analyst. While technical analysts relay heavily on charts and graphs of security prices, fundamental analysts relay on a in-depth look at the underlying company’s financial position. They try to gauge whether the firm is a healthy one or if it’s in for some dire straits based on its public financial accounting statements. Fundamental analysis is done by measuring all kinds of metrics that gauge the financial health and the performance of the underlying company, not the movement of the stock price of the security along a line in a graph. A fundamental analyst may look at a SWOT analysis performed for the firm. A SWOT analysis looks at internal and external factors that may affect the long-term performance for an individual firm. The letters stand for two internal factors, Strengths and Weaknesses of the firm; and two external factors, Opportunities and Threats. This is big-picture stuff that a firm’s strategic planning committee or senior leadership normally looks at. And speaking of leadership teams, fundamental analysts also take into account things like the past track record of key players in the firm’s C-Suite. But the metrics that fundamental analysts most often employ are typically represented by ratios derived from complex formulae. These metrics can include using the discounted dividend model to analyze the firm’s dividend payouts, looking at return on investment, return on equity, the price to earnings ratio, free cash flow of the firm, return on assets, price to book value, and the weighted average cost of capital. While there are die-hard adherents to both the fundamental and technical analysis camps, most investors benefit from some combination of the two differing methodologies. I think if you’re preparing to make an investment, the more analysis available to you, the more informed your decision can be. Learn about both approaches and do extensive research, not only on potential investments, but on your own research methods as well.

What is forex trading strategy?

A set of analyses that a Forex day trader uses to determine whether to buy or sell a currency pair at any given time. Forex trading strategies can be based on technical analysis charting tools or fundamental, news-based events. The day trader's currency trading strategy is usually made up of a multitude of signals, which trigger buy or sell decisions. Forex trading strategies are available for free, for a fee or are developed by the traders themselves.I just follow those technical and fundamental analysis detail provided by Greenvault FX which is so useful to predict my trading.

Why speculation in stock market?

The simple answer? To make money. Speculators in the stock market try to predict price movements of common stocks so as to profit from them. Speculators primarily rely on Technical Analysis on their buy and sell orders. Investors, differentiated from speculators, primarily use Fundamental Analysis.

What is the cost to learn commodity futures trading?

There are two approaches to analyze the markets, technical analysis and fundamental analysis. The first is the art of forecasting future price directions by analyzing commodity futures trading chart patterns. The second one looks at all factors which affect production and consumption of the commodity in order to determine if price will rise or decline.