TECHNICAL ANALYSIS VS FUNDAMENTAL ANALYSIS: Similarities and Differences
It’s important to understand the differences and similarities between the two:
Similarities:
- Both methods aim to help investors make better decisions in the financial markets.
- They involve the examination of data to gain insights into potential investments.
Differences:
Data Used: Technical analysis uses historical price and volume data, while fundamental analysis relies on financial statements and economic factors.
Time Horizon: Technical analysis is typically used for short-term trading, while fundamental analysis is more suited for long-term investing.
Philosophy: Technical analysis assumes that market prices already reflect all available information, while fundamental analysis seeks to uncover undervalued or overvalued assets.