Fundamental Vs Technical Analysis
Which is best; Fundamental analysis or Technical analysis?
There is no doubt that Fundamentals are the drivers of any stock or market. But which piece of fundamental information is driving price action at any moment? If anyone can tell me this then you have my attention!
The media will say they know exactly why a stock price has gone up or down yet the fact is no one ever knows.
We’ve all seen companies release record profits. Mum and dad investors jump on board in excitement only to see the share price drop and go into the red by end of day. Everyone scratches their heads in disbelief.
On the flip side we’ve seen companies release record losses and investors watch on stunned as the share price jumps to the upside.
Currency boosting interest rate hikes in the U.S over the past 12 months were expected to be met with a strong bull market developing in the Greenback. Yet all we’ve seen over the past year is an impulsive move lower and the US Dollar Index (DX) drop dramatically.
Fundamental Traders
Fundamental traders study company financial statements or economic events to determine future price direction. Generally Technical traders ignore these factors.
Technical Traders
Technical traders focus on price action via various technical indicators, theories and methods.
There isn’t a right or wrong way to trade markets for profit.
Martin Schwartz, trader, has accumulated an immense amount of wealth trading with technical analysis.
As has fundamental wealth builder and multi billionaire Warren Buffet.
Technical analysis and fundamental analysis have their place.
Fundamentals are market or stock drivers, while technicals are used to time your trades, especially if you are looking to profit from your strategies over short to medium term time frames.
Whether one method is better than the other is purely a personal choice.
At The Chartist we focus purely on technical analysis. Our members will often use our Chart Research to support or deny the fundamental analysis issued by their broker.
