What is difference between fundamental analysis and technical analysis of stock?

Difference Between Fundamental Analysis & Technical Analysis 📊📈

1. Focus 🧠

• Fundamental Analysis:

  • Focuses on the financial health and intrinsic value of a company.
  • Analyzes earnings, debt, management, industry trends, and economic factors.
  • Aims to understand long-term growth potential. 💰📅

• Technical Analysis:

  • Focuses on price movements, trends, and trading volume.
  • Uses charts, indicators, and patterns to predict future price movements.
  • Aims to find short-term trading opportunities. 📉📈

2. Time Horizon 🕒

• Fundamental Analysis:
  • Primarily used for long-term investing (months/years).
  • Based on the idea that stock prices will reflect true value over time. ⏳
• Technical Analysis:
  • Primarily used for short-term trading (hours/days).
  • Focuses on short-term price trends and patterns. ⏱️

3. Methodology 🛠️

• Fundamental Analysis:

  • Data-Driven: Looks at financial statements, earnings reports, and macroeconomic data.
  • Uses metrics like P/E ratio, EPS, ROE, and growth projections.
  • Tries to assess whether a stock is undervalued or overvalued. 💹

• Technical Analysis:

  • Chart-Based: Relies on historical price movements and patterns like candlesticks, support, resistance, and moving averages.
  • Uses indicators like RSI, MACD, and Bollinger Bands.
  • Tries to predict future price movements based on past trends. 📊

4. Use Case 🎯

• Fundamental Analysis:

  • Best for investors looking to make informed decisions for long-term growth. 📅🏦
  • Example: Buying shares of a company with strong earnings and growth potential. 🚀

• Technical Analysis:

  • Best for traders looking to profit from short-term price fluctuations. ⏱️📈
  • Example: Buying/selling based on chart patterns and price action. 🔄

5. Tools & Indicators 🧰

• Fundamental Analysis:

  • Financial Reports (Income statement, balance sheet, cash flow).
  • Ratios (P/E, P/B, EPS, ROE).
  • Macroeconomic Data (GDP, inflation, interest rates).

• Technical Analysis:

  • Charts (Candlestick, bar, line).
  • Indicators (RSI, MACD, Moving Averages).
  • Patterns (Head & Shoulders, Cup & Handle, Double Top).

6. Key Objective 🎯

• Fundamental Analysis:
  • Determine the true value of a stock and its long-term growth potential. 📊💵
• Technical Analysis:
  • Time market movements for buying/selling based on price action. 📉📈

Conclusion:

• Fundamental Analysis is all about company health and long-term growth 📅💰.
• Technical Analysis focuses on short-term price movements and market trends ⏱️📈.

Use them together for a well-rounded approach! 📈💡