You might hear many people saying that you should analyze stocks before you invest and take a calculated risk. There are two ways of analyzing stocks: Fundamental analysis and Technical analysis. This article will help you to understand the differences between the two types of analysis of stocks.
What is Fundamental Analysis?
It is a method of analyzing a stock or any type of security by measuring its intrinsic value.
Now you might be wondering what is intrinsic value?
Intrinsic value also known as fundamental value is the true, inherent and essential value of an asset independent of its market value. So, it is dependent on the company’s financial condition and profitability of the operations.
What is Technical Analysis?
Technical analysis is the technique of predicting the behavior of the stock price by observing previous trends of price and volumes with the use of charts and technical indicators.
The basis on which the technical analysis is conducted is the prices of stocks.
Difference between Fundamental and Technical analysis
Both methods of analysis of stocks helps the investors to take market-related decisions. They are different from each other and are useful in different situations. They appeal to different types of investors. Technical analysis appeals to intraday traders whereas fundamental analysis appeals to long term investors.
You can also learn in detail about Fundamental and Technical analysis of stocks in our blogs
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