Investing in the Money Market
January 5, 2019
Fundamental Analysis Explained
April 1, 2019

Technical Analysis of Stock

  • There are two primary methods used to analyze securities and make investment decisions: fundamental analysis and technical analysis.
  • Fundamental Analysis

Fundamental analysis involves analyzing a company’s financial statements to determine the fair value of the business.

Fundamental analysis instead looks at economic and financial factors that influence a business  

  • Technical Analysis

Technical analysis assumes that a security’s price already reflects all publicly-available information and instead focuses on the statistical analysis of price movements.

Technical analysis looks at the price movement of a security and uses this data to predict future price movements

 

Technical analysis is a method of evaluating securities that involve statistical analysis of market activity, such as price and volume. Technical analysts do not attempt to measure a security’s intrinsic value, but rather, use charts and other tools to identify patterns that can be used as a basis for investment decisions.

Technical analysis is the analysis of supply and demand in the market to determine where the price trend is headed

Technical analysis attempts to understand the market sentiment behind price trends rather than analyzing a security’s fundamental attributes

If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor over the long-term.

FORMS OF TECHNICAL ANALYSIS

ØChart patterns

ØTechnical Indicators and oscillators

ØCombination of techniques

Technical analysts’ exclusive use of historical price and volume data

Unlike fundamental analysts, technical analysts don’t concern themselves with a stock’s valuation – the only thing that matters are past trading data and what information the data might provide about future price movements.

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