What  is the difference between fundamental and technical analysis

What is fundamental Analysis?

Fundamental analysis is a method applied to determine the value of a stock or security. It involves an analysis of a company's management, business model, financial ratios, financial statements, and other metrics. Fundamentals could also refer to economic conditions, macroeconomic data, and industry trends.

Fundamental analysts search for stocks currently trading at prices higher or lower than their real value. If the fair market value is higher than the market price, the stock is deemed undervalued, and a buy recommendation is given. Fundamental securities analysis helps you to predict future price movement and measure whether a stock is undervalued or overvalued. At the same time, it helps you analyze a company's strengths and its ability to beat its competitors.

What is Technical Analysis?

Technical analysis is a tool, or method, used to predict the probable future price movement of a stock, currency, or commodity based on market data (price and volume data). Technical traders believe that current or past price movements in the market are the most reliable indicators of future price movements.

 Technical analysts use different types of indicators and averages to determine the technical trend of a stock or index. Experts criticize technical analysis for ignoring fundamental factors and only considering price movements. The use of technical analysis is not limited to technical traders. Fundamental traders use fundamental analysis to determine whether to buy into a market, but after making that decision, use technical analysis to identify good low-risk buy entry levels.

Technical analysis is based on three assumptions. Technical analysts believe that everything from a company’s fundamentals to broad market factors to market psychology is already priced into the stock. This removes the need to consider the factors separately before making an investment decision. The second assumption is that price moves in trends. Technical analysts believe that prices move in short-, medium-, and long-term trends. In other words, a stock price is more likely to continue a past trend than move erratically. Most technical trading strategies are based on this assumption. last one is that technical analysts believe that the previous trends will repeat again