- What's The Difference Between Technical and Fundamental Investing?

There are many reasons why people decide to trade in the stock exchange invest money. One of the biggest reasons is to get the income they earn and save to work better for them by yielding returns on investments invest money. Nowadays more than ever before stock market, people are finding it easier to invest in the stock market through company shares as a result of the increased awareness of the fortunes available in the stock market invest money.

One of the very first things an aspiring trader or investor must do before attempting to invest in the stock market is to equip himself with knowledge invest money. Some people just think I'll get a stock broker to do everything for me invest money. This method of approach is wrong as the stock broker has other clients to attend to invest money. The major service the stock broker renders is helping you manage your sells and buys on the stock exchange; although they could advise you on the potential benefits of buying a particular stock as against another invest money.

One of the basic knowledge an aspiring trader stock market, broker or investor must have is the two major forms of stock analysis invest money. This knowledge is the root of all the necessary knowledge needed to survive and make profits in such a fiercely competitive market invest money. After all is said and done stock market, most finance and stock brokerage experts will tell you that these two forms of analysis is what would ultimately save the day invest money. These two forms are known as the Technical Analysis and the Fundamental Analysis invest money.

According to Wikipedia -- Technical analysis involves the manner of playing the market with assumes that non-random price patterns and trends exist in markets stock market, and that these patterns can be identified and exploited invest money. While many different methods and tools are used stock market, the study of charts of past price and trading action is primary invest money. It maintains that all information is reflected already in the stock price stock market, so fundamental analysis is a waste of time invest money.

Trends -- are your friend -- and sentiment changes predate and predict trend changes invest money. Investors' emotional responses to price movements lead to recognizable price chart patterns invest money. Technical analysis does not care what the --value-- of a stock is invest money. Their price predictions are only extrapolations from historical price patterns invest money.

However this is different from what is obtainable in fundamental analysis invest money. Fundamental analysis takes a critical look at the performance history of a company stock market, the method of management stock market, market share and how much profit it has made in at least three years invest money. Also included in the indices used as measuring yardstick is its future projections and how it intends to execute all stipulated projects invest money. The aim of all these is to ascertain the company's potential risk stock market, make conclusions based on its present performance stock market, and to forecast its possible profitability and increase in stock prices invest money.

Those are the major differences between the two methods of analysis invest money. The key is to finding that which suits you invest money. You can use technical analysis if you plan on investing for short amount of time weeks maybe even months but not years invest money.

Likewise you don't want to be a Fundamental investor unless you plan on investing for months and months invest money. Some people though use the two methods when appropriate invest money. But in all stock market, choose what works best for your invest money.