...........Fundamental
Analysis versus Technical Analysis
They shouldn't be one versus the other. Instead they should complement each other. Technical analysis tools can be used to draw significance to various economic trends. Knowing economic trends can aid the technician in determining the potential significance of a various technical signals and patterns.
An investor that marries the knowledge has a strong sense of the market.
The common thread between technical and fundamental analysis is the study of trends. Where technical analysis is the study of trends in price and volume...fundamental analysis concerns itself with economic and corporate growth trends and the projection of performance based on trends of relevant factors.
The basis of all long term trends in price and volume for any tradable is fundamentals. Technical analysis thrives on the study of changing supply and demand patterns.
In the study of trends it is important to determine significance in changes in underlying perceptions of value that result from fundamentals and the forecasts of future performance.
A balanced understanding of the two disciplines can provide an excellent basis for a successful trading experience.
As with technical analysis, there are many fundamental tools that are purposed toward early identification of trend reversals. A corporate growth rate forecast might be revised as a result of an earnings warning, or perhaps as a result of a sudden or continued decline in industry sales reports, or by association of sector move.
Forecasts that are a continuation of the most recent trend and do not range very far into the future can be measured against longer term forecasts as a ratio that may give a fundamental analyst a stronger knowledge of the conditions of market valuation.
It has been said that Industry behavior accounts for 15 to 20% of a stocks fluctuations over time. The economy is suppose to account for 30 to 35% of a stocks fluctuation in price. Specific information on the Company is suppose to account for 30 to 35% of the price of a stock over time. Other factors make up the remaining 15 to 20%.
If you think about it, the company's fundamentals should show you who to buy and the charts should tell you when. You really cannot have one without some of the other.
Simply said...buying fundamentals will reward you over the long term, however, if you couple good fundamentals with good charts, you have a much better shot at being profitable immediately upon entry and knowing when to exit to protect profits.
Last of all, we highly recommend investors and traders learn how to successfully invest, trade or both via The Library.
