Fundamental Vs technical logic explained. What to choose?

 

Fundamental analysis is a method of evaluating a security by analyzing various financial and economic factors, such as the company's financial statements, management, and industry trends. Technical analysis, on the other hand, is a method of evaluating securities by analyzing statistical trends and patterns in the market data, such as price and volume.

Both methods have their own advantages and disadvantages. Fundamental analysis is considered to be more comprehensive and long-term oriented, while technical analysis is considered to be more short-term oriented.

Ultimately, the choice between fundamental and technical analysis depends on the individual investor's preferences, risk tolerance, and investment horizon. Some investors may prefer to use both methods in conjunction with each other, as they can provide a more complete picture of a security's value.


Fundamental analysis is a bottom-up approach, meaning that it starts by analyzing the individual company and then looks at the industry and macroeconomic factors that may affect it. This method is often used by value investors, who look for companies that are undervalued based on their fundamentals. They believe that by analyzing a company's financial statements, management, and industry trends, they can identify companies that are trading at a discount to their intrinsic value and are likely to generate good returns in the long run.

On the other hand, technical analysis is a top-down approach, meaning that it starts by analyzing the market trend and then looks at the charts and patterns of a specific security. This method is often used by traders, who believe that past market data can predict future price movements. They use various technical indicators and chart patterns to identify buying and selling opportunities. Technical analysis is often considered to be more short-term oriented and is less focused on the underlying fundamentals of the company.

Some investors use both methods to make an investment decision, they believe that by combining the two they can get a more comprehensive view of a security's value. They use the fundamental analysis to identify good companies and then use the technical analysis to identify the right time to buy or sell them.

In the end, the choice between fundamental and technical analysis depends on your investment style, risk tolerance, and investment horizon. Some investors may prefer one method over the other, while others may use a combination of both.