What is Technical and Fundamental Analysis?

This is a discussion on What is Technical and Fundamental Analysis? within the New to Trade2Win forums, part of the Reception category; Fundamental Analysis - Relates to a particular entity's performance. In the old days before Computers and gizmos, traders looked at ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jun 27, 2009, 3:28pm   #16
 
zambuck's Avatar
Joined Jan 2003
Fundamental Analysis - Relates to a particular entity's performance. In the old days before Computers and gizmos, traders looked at entity's data like PE ratio, EPS, yield etc etc..and then decided if it is worthwhile to 'invest' in that entity by deciding 'how much' they would be 'willing' to pay to purchase a 'share' in that entity, with a hope that in few years the price of share will rise with the performance of hat entity.

Financial pages of any reputable newspaper will have these data listed daily. In past not everyone purchased stock on a minute timescale, but days of weeks.

While this was in some way 'real time' it was only the presence of Brokers and Traders who carried out 'trading' on behalf of people willing to 'buy share' via verbal or telephone instruction.

Sometimes traders in pits wanted to keep track of price changes and only means to record these was a note pad or fag packet.

Rather than writing actual data some reverted to point and figure charting. Traders did not want to record small and irrelevant noises in trading, only those that made significant ones were recorded. O's for 'pipe waters flowing down'...and X's for 'spiders climbing the wall....! or Point and Figure Charting was born. It is basically shorthand version of data of share movement.

Advent of computers allowed people to record data every second, minute, hourly etc....and online trading meant that these kind of decisions were executed faster and in almost real time.

Technical Analysis - It was at that time that the term Technical Analysis was born, with people creating 'indicators' that took into account OHLCV format of data. These were based on information taken from OHLCV and Time (Min, Hour, Day, Month etc etc)

This allowed Traders to see which entity is rising or falling. Traders looking at Fundamental information will decide to sell or purchase the 'shares' of that entity, but Technical Analysts will observe this rise and fall, which will be made more apparent by the indicators and purchase or sell 'shares' by just looking at the indicators reading. Generally they would not look at the PE, EPR etc etc in making that decision.


Yield - http://en.wikipedia.org/wiki/Yield_(finance)

PE Ratio or PER - P/E ratio - Wikipedia, the free encyclopedia

EPR - P/E ratio - Wikipedia, the free encyclopedia

I have been doing research on TA and Indicators for some time now. I have been looking at which indicators work when. Which one will work in - sideways, rising or falling markets....Which indicator will complement another one....what are the best time scale to use for each indicator etc etc....

And then how to group indicators on a chart layout....in this case Metastock....I trade with mid term trading...so it may be weeks or months...I refuse to sit in front of 6 screens, I would rather watch paint dry..!....I have other business interests and time is scarce so I have my own set up that suits me fine.

It is perfectly possible to make reasonable money trading short to mid term.

I have no time for Forex, or spreadbets or CFD. If your TA is perfect then why spreadbet..?..Go for the real thing.
__________________
zambuck

The most futile and disastrous day seems well spent when it is reviewed through the blue, fragrant smoke of a Havana Cigar.
Evelyn Waugh.
zambuck is offline   Reply With Quote
Old Jul 31, 2009, 3:13am   #17
 
5 Posts
Joined Jul 2009
you can also think of fundamental analysis is the cause and the technical analysis as the effect. technicians believe that everything fundamentally, psychologically, or whatever may affect the stock price is displayed on charts. technicians believe that studying technical analysis is like a shortcut then rather studying fundamentals. i look at both, but then again they sometimes contradict each other..also, fundamentals are more long-term - you study their annual balance sheets and decide if it's a good investment...technical analysis is more short term- you can just look at a daily chart and using their indicators, you can decide if a stock is worth holding for a couple days to take some quick profits
itsbearabull is offline   Reply With Quote
Old Nov 4, 2010, 6:17am   #18
Joined Nov 2010
Re: What is Technical and Fundamental Analysis?

I read somewhere that fundamentals determine price action while technicals express it. Something to that effect. But in terms of which analysis works best, it's tough to tell. I personally am biased towards fundamentals but then "history tends to repeat itself" so I make use of technical analysis as well.
littlebopip is offline   Reply With Quote
Old Aug 16, 2013, 4:04pm   #19
Joined Jul 2013
Re: What is Technical and Fundamental Analysis?

Fundamental analysis is based on looking at external factors that can affect the performance of a company, commodity or currency. These factors can range from anything from a company having a large investment in company that is set to be liquidated, to political issues. This often makes it difficult to conduct research based on fundamental analysis because the factors are generally outside the control of the traders or the stock market.

Fundamental Analysis - Keep It Easy

Hate2Lose is offline   Reply With Quote
Old Apr 19, 2015, 9:53pm   #20
Joined Apr 2015
I think it is necessary to use both types of analysis and watch what more profitable in the process.
Svetlana Korj is offline   Reply With Quote
Old Oct 28, 2015, 9:35am   #21
 
3 Posts
Joined Oct 2015
That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price.
solid2222 is offline Broker   Reply With Quote
Old Oct 29, 2015, 11:44am   #22
Joined Oct 2014
Different people use different approaches to markets, someone might tell you that fundamentals are the key, another will tell you that technicals are the key, don't listen to either one. Devise your own strategy.
arigoldman is offline   Reply With Quote
Old Oct 29, 2015, 6:42pm   #23
 
5 Posts
Joined Oct 2015
How can we combine TA & FA in trading? Support with FA, we know the price would go up but TA tell the opposite, how do we decide?
owen88 is offline   Reply With Quote
Old Oct 29, 2015, 8:13pm   #24
Joined Oct 2015
Quote:
Originally Posted by owen88 View Post
How can we combine TA & FA in trading? Support with FA, we know the price would go up but TA tell the opposite, how do we decide?
TA short term. FA long term.
IFeelFree is offline   Reply With Quote
Old Oct 29, 2015, 8:19pm   #25
Joined Oct 2015
Quote:
Originally Posted by solid2222 View Post
That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price.
However, many factors have an influence on price that is limited in duration. Such factors ("shocks") can move prices away from equilibrium. One way of trading is to bet on a return to equilibrium. This is the approach of statistical arbitrage, which is what I use.
IFeelFree is offline   Reply With Quote
Old Oct 30, 2015, 12:31am   #26
Joined Nov 2011
Quote:
Originally Posted by IFeelFree View Post
FA long term ...
Or exactly the opposite, of course, if you're thinking of entering a forex trade at about 1.25 (UK time) on the first Friday of the month, with the US's NFP figures announcement coming up 5 minutes later, and wisely decide to wait 10 minutes before doing so.
alexaherself is offline   Reply With Quote
Thanks! The following members like this post: Forexmospherian
Old Oct 30, 2015, 2:21pm   #27
Joined Oct 2015
Technical is speculating off historical data. Whether it be patterns, indicators, or some other form of analysis that evaluates historical data.

Fundamental is speculating off future predictions. A fundamentalist would buy wheat futures predicting the price will rise because of higher than average rainfall, or short a currency because of some political influence.
__________________
One who says they can and one who says they can't are both usually right.
Uranus is offline   Reply With Quote
Old Oct 30, 2015, 6:36pm   #28
Joined Nov 2011
Quote:
Originally Posted by Uranus View Post
A fundamentalist would buy wheat futures predicting the price will rise because of higher than average rainfall
It could be argued that in practice, that also tends to be based, at least to some extent, on historical experience: typically she wouldn't do that, if higher-than-average rainfall, historically, had usually been followed by a fall in the price of wheat. Both TA and fundamental parameters involve an assessment (whether analytical or intuitive) of the probability of previous and/or current events influencing future developments, and in either case price movements are caused by imbalances between buying and selling pressure.
alexaherself is offline   Reply With Quote
Old Nov 2, 2015, 7:12am   #29
Joined Oct 2014
Yes, but fundamental effects do not last long.
arigoldman is offline   Reply With Quote
Old Jan 24, 2016, 3:54pm   #30
 
6 Posts
Joined Jan 2016
Excuse me, can you give me some information of market sentiment analysis ?
annie_cavely is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Back testing with technical and fundamental data AdrianR Stocks 0 Nov 14, 2007 3:53am
Fundamental Analysis Pat494 Economic & Fundamental Analysis 15 Jul 14, 2006 7:07pm
Fundamental analysis TheWolf Forex 5 Aug 9, 2005 10:40pm
Is fundamental analysis any good? Bluewave Trading Systems 4 Jul 15, 2004 1:42pm
Fundamental Analysis destiny Psychology, Risk & Money Management 17 Jan 21, 2004 11:51am

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)