Thursday, 2 June 2016

Difference between fundamental analysis and Technical analysis

I have got many readers asking me which is better Fundamental or technical analysis ?
Well each one has got a different approach towards a stock




Lets take a small example here

All of us go out to the mall during the weekend with our family and friends

what if a Technical analyst and a fundamental analyst visited a mall ?

At the food court a fundamental analyst would go to each restaurant , study the food and beverages in the menu and then make a decision to eat there or not .

The Menu is like the P/E ratio ,return on equity , Debt-to-equity ratio and other fundamental metrics

By contrast  at the same food court  , a technical analyst would take a seat that allows him or her to oversee the whole food court . The Technical analyst will then watch the people go and eat at the restaurants .

Regardless of the food and beverages served in the menu ,his or her decision is based on the patterns and activities of the people going in and out of the restaurant . Moreover , never forget that the number of people performing the activity matters a lot . This is price action and market volume in action .


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