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

PurpleTrades > Blog > Stock market > What is difference between fundamental analysis and technical analysis of stock?

Difference between Technical analysis and Fundamental analysis.

Fundamental analysis : Basically, this study is to analyse stocks for investing purpose. To invest in any stock , one needs study it deeply, Fundamental analysis covers all the ratios and sheets used in checking the background of a stock and to understand if the stock is under valued or over valued.

All ratios like P/E ratio, EPS, YTM, Dividend ratio, balance sheet etc are analysed and based on the outcome we decide to buy/avoid stock for long term investment.

Technical analysis : This study considers only the price of stock and discards all other sheets and news, technical analysis is based on the assumption that stock price itself includes all the information which moves it up or down, by recognising price movement and identifying patterns of price movement on charts, we can forecast future price movements.

Generally, this analysis is used for short term and intraday trading based on Buy and sell signals using indicators like Moving average, Support and resistance, MACD, etc.

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