Difference between Technical and Fundamental Analysis in Share Market

Share Market is a place where stocks are subjected to several ups and downs. This makes it a tad bit difficult for investors to know how to invest in the share market. Technical Analysis and Fundamental Analysis are both used to research and predict the trend of a stock, which helps the investors out.

Technical Analysis is used to predict the price movement of entities by analysis of the interaction of demand and supply based on previous data, patterns, and trends represented using charts. This helps with deciding the perfect time to enter or exit the market. It provides a comprehensive analysis of the reason for changes in the shares.

  • Technical Analysis uses the following attributes:
  • Time is taken for the price movement
  • The volume of transaction plays a key role in determining the change

Width of the change checks the number of industries affected by the change
Fundamental Analysis of a share market is the study of the factors that impact the stock price of a business in the future. These factors include a financial statement, management process, etc. It determines the intrinsic value of a business which helps in determining if a certain stock is overpriced or under-priced. The intrinsic value of a business can be measured by analyzing the economic, financial and all other qualitative and quantitative factors.
Fundamental Analysis is a three-phase analysis of:

  • The economic status of the country through economic indicators
  • The prospects and life cycle of the respective industry

The financial and non-financial attributes of the respective organization
While technical analysis is more relevant for short term investments and trading, fundamental analysis is more relevant for long term investments and investing. Fundamental analysis focuses on both the past and the present data while technical analysis focuses solely on past data. In technical analysis, a trader buys a stock when he or she expects it to be sold at a higher price. In fundamental analysis, however, an investor buys a stock when its market price is lesser than its intrinsic value.

In fundamental analysis, the stock is bought by the investor when the market price of the stock is less than the intrinsic value of the stock. As against, in technical analysis, the stock is bought by the traders, when they expect that it can be sold at a relatively higher price.
These technicalities form the base of the share market industry. While learning from experience is a method encouraged by a lot of investors, some organizations provide the necessary training like some share market courses in Mumbai. These courses ensure that you make the most of the share market.

It might be difficult for you to choose between becoming a trader or an investor. This depends on whether you are good at Fundamental Analysis or Technical Analysis of the share market. Share market training in Mumbai can surely help you understand the difference between these and hence help you choose the desired path.