Difference Between Technical and Fundamental Analysis

• Technical Analysis:Dissects price movements and trading volumes to estimate future prices.
• Fundamental Analysis:Assesses an organisation’s monetary wellbeing and economic situations.

Example: Technical Analysis resembles utilising atmospheric conditions to foresee the upcoming figure, while fundamental analysis is likened to concentrating on environmental change over many years.

Aspect	Technical Analysis	Fundamental Analysis
Definition	Analyzing past market data, primarily price and volume, to predict future price movements.	Evaluating a company's financial health, market position, and growth potential to determine its intrinsic value.
Focus	Focuses on price charts, patterns, and indicators.	Focuses on financial statements, industry trends, and economic factors.
Objective	To identify short-term trading opportunities.	To make long-term investment decisions.
Time Horizon	Short-term, ranging from minutes to weeks.	Long-term, ranging from months to years.
Tools Used	Charts, technical indicators (e.g., RSI, MACD), and patterns.	Balance sheets, income statements, and macroeconomic data.
Risk Level	High, as it involves frequent trades based on price volatility.	Moderate, as it focuses on long-term stability and growth.
Best For	Traders looking to capitalize on short-term market movements.	Investors aiming for long-term growth and wealth accumulation.

How Technical Analysis Helps Traders

It gives apparatuses to distinguishing trends, trends, and potential entry/exit points focuses, aiding informed independent direction.

Example: Utilising Technical Analysis is like exploring with a guide and compass; it guides traders in new domain.