Thursday, May 24, 2007

What is the difference between fundamental and technical analysis?

These terms refer to two different stock-picking methodologies used for researching and forecasting the future growth trends of stocks.
  • Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies.
  • Technical analysis is the evaluation of securities by means of studying statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value but instead use stock charts to identify patterns and trends that may suggest what a stock will do in the future.
Courtesy: Investopedia.com (original post @ http://www.investopedia.com/ask/answers/131.asp)
Introduction to Fundamental Analysis @ http://www.investopedia.com/university/fundamentalanalysis/
Introduction to Technical Analysis @ http://www.investopedia.com/university/technical/

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