Technical analysis and fundamental analysis are the two main schools of thought when it comes to analyzing the financial markets. As we’ve mentioned, technical analysis looks at the price movement of a security and uses this data to predict future price movements. Fundamental analysis instead looks at economic and financial factors that influence a business. Let’s dive deeper into the details of how these two approaches differ, the criticism against technical analysis, and how technical and fundamental analysis can be used together. Tools of the Trade Technical analysts typically begin their analysis with charts, while fundamental analysts start with a company’s financial statements. (For further reading, see Introduction To Fundamental Analysis and Advanced Financial Statement Analysis ). Fundamental analysts try to determine a company’s value by looking at its income statement , balance sheet , and cash flow statement . In financial terms, th...
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