What is the difference between Fundamental Analysis and Technical Analysis?

Fundamental analysis and technical analysis are two different approaches to analyzing securities such as stocks, currencies, or commodities.

Fundamental analysis involves examining a company`s financial and economic fundamentals, such as its earnings, revenue, assets, liabilities, and industry trends, in order to determine its intrinsic value. This analysis focuses on factors that affect a company`s long-term prospects and tries to assess the company`s overall health and future growth potential. Fundamental analysis is often used by long-term investors who are interested in the long-term prospects of a company.

On the other hand, technical analysis involves analyzing statistical data generated by market activity, such as past prices and volume, in order to identify patterns and trends that can be used to predict future price movements. This analysis focuses on market data rather than the underlying financial and economic fundamentals of a company. Technical analysis is often used by short-term traders who are interested in making quick profits based on market fluctuations.

In summary, the key difference between fundamental analysis and technical analysis is that fundamental analysis focuses on the underlying financial and economic fundamentals of a company, while technical analysis focuses on statistical data generated by market activity.