What are the differences between technical and fundamental analysis?

[Brad Vitello]

Hello, I would like to know the differences between technical and fundamental analysis.

[Sarah Parker]

Hi, thank you for your question! 

Technical and fundamental analysis are two of the most commonly used analysis methods when it comes to all forms of trading. These two are completely different and are relying on completely different aspects of trading data in order to generate their results. In the end, both of them have a common goal, to predict, as accurately as possible outcomes of trade moves, and price movements.

The fundamental analysis determines the value of the stock by intrinsic value. This value encompasses everything from the overall economy and industry conditions to the financial condition and management of companies, earnings, expenses, assets, and liabilities.

On the other hand, technical analysis derives value from the stock’s price and volume. Without paying attention to all aspects that fundamental analysis is paying to because technical analysts think that it is all included in these two aspects. 

Technical analysts do not attempt to measure a security's intrinsic value, but instead, use stock charts to identify patterns and trends that suggest what a stock will do in the future.