What’s the Difference?
When people analyze stocks or any tradable asset, they usually follow one of two main approaches: Technical Analysis or Fundamental Analysis. Each one is like using a different lens to look at the same object. Both methods try to answer the same question:
“Should I buy, sell, or avoid this stock?”
But how they arrive at that answer is completely different.
1️⃣ What is Technical Analysis?
Technical Analysis is all about reading charts. It’s based on the belief that everything that affects a stock's price is already reflected in the stock price itself.
So instead of reading about a company's earnings or business strategy, technical analysts look at price movements, trading volumes, and patterns on charts to try to guess what might happen next.
How It Works:
Technical traders believe that history repeats itself.
Price moves in trends — up, down, or sideways.
Patterns like flags, triangles, and head-and-shoulders are seen as hints.
Indicators like RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence), and moving averages are used to make decisions.
Key Concepts in Technical Analysis:
Candlestick Patterns: These show how the price moved in a given time — whether buyers or sellers were in control.
Support & Resistance: Support is a price level where a stock tends to stop falling. Resistance is where it often stops rising.
Volume: Helps you understand the strength behind a price movement.
Breakouts & Reversals: Important signals that indicate possible trend changes.
Real-Life Example:
Let’s say Stock A is trading at ₹500. It has bounced from this price three times before. That level becomes a support. If it suddenly jumps above ₹550 with high volume, that could be seen as a breakout, and a trader might enter a short-term position.
Pros of Technical Analysis:
Helpful for short-term trading like intraday or swing trades.
Fast decision-making based on visual cues.
Doesn’t require knowledge of a company’s financials.
Can be used across all asset classes (stocks, forex, commodities, crypto).
Cons of Technical Analysis:
It doesn’t look at what the company actually does.
False signals can mislead.
It works on probability — not certainty.
Can be overwhelming with too many indicators.
2️⃣ What is Fundamental Analysis?
Fundamental Analysis is like doing background research on a company before deciding whether to invest in it. Instead of looking at charts, you look at the company’s financial health, industry conditions, economic trends, and management quality.
The main goal is to find the true value (intrinsic value) of a stock and compare it with the current market price.
How It Works:
If the intrinsic value is more than the market price, the stock is considered undervalued and worth buying.
If the market price is more than the intrinsic value, it’s seen as overvalued, and better to avoid or sell.
Key Tools of Fundamental Analysis:
Financial Reports: Balance Sheet, Income Statement, Cash Flow Statement.
Ratios: PE (Price-to-Earnings), ROE (Return on Equity), Debt-to-Equity, EPS (Earnings Per Share).
Company's Business Model: What the company does, how it earns, and whether it's sustainable.
Management Quality: Experience and vision of the leadership.
Industry & Economy: Is the industry growing? Are economic conditions favorable?
Pros of Fundamental Analysis:
Ideal for long-term investment.
Helps understand the actual business you’re putting money into.
Less affected by short-term volatility.
Encourages rational decision-making.
Cons of Fundamental Analysis:
Takes time and effort to study.
May not tell you when exactly to buy or sell.
Requires understanding of finance, economics, and accounting.
Stock may stay undervalued for a long time despite good fundamentals.
✅ Which One Should You Choose?
It all depends on your personality, goals, and time commitment.
Go for Technical Analysis if:
You’re active and want to trade daily or weekly.
You like working with patterns and visuals.
You want to time your entry and exit precisely.
You are okay with taking risks for quick gains.
Go for Fundamental Analysis if:
You think long-term and want to build wealth.
You want to invest in solid companies.
You have patience and a stable mindset.
You prefer logic and numbers over charts.
⚖️ Can You Combine Both?
Yes, and that’s what many experienced market participants do.
This combined approach is called techno-fundamental analysis.
For example:
You use fundamentals to select a good company.
You use technicals to find the right entry point.
This way, you get the best of both worlds.
🧠 Final Thought
There’s no universal rule that says one method is always better. It’s all about what suits your style and objective.
If you’re building a portfolio for retirement or wealth over 10+ years, fundamental analysis is your friend.
If you want to trade actively and spot market opportunities daily or weekly, technical analysis is the way to go.
Over time, learning both will make you a more flexible and better-informed market participant.
When people analyze stocks or any tradable asset, they usually follow one of two main approaches: Technical Analysis or Fundamental Analysis. Each one is like using a different lens to look at the same object. Both methods try to answer the same question:
“Should I buy, sell, or avoid this stock?”
But how they arrive at that answer is completely different.
1️⃣ What is Technical Analysis?
Technical Analysis is all about reading charts. It’s based on the belief that everything that affects a stock's price is already reflected in the stock price itself.
So instead of reading about a company's earnings or business strategy, technical analysts look at price movements, trading volumes, and patterns on charts to try to guess what might happen next.
How It Works:
Technical traders believe that history repeats itself.
Price moves in trends — up, down, or sideways.
Patterns like flags, triangles, and head-and-shoulders are seen as hints.
Indicators like RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence), and moving averages are used to make decisions.
Key Concepts in Technical Analysis:
Candlestick Patterns: These show how the price moved in a given time — whether buyers or sellers were in control.
Support & Resistance: Support is a price level where a stock tends to stop falling. Resistance is where it often stops rising.
Volume: Helps you understand the strength behind a price movement.
Breakouts & Reversals: Important signals that indicate possible trend changes.
Real-Life Example:
Let’s say Stock A is trading at ₹500. It has bounced from this price three times before. That level becomes a support. If it suddenly jumps above ₹550 with high volume, that could be seen as a breakout, and a trader might enter a short-term position.
Pros of Technical Analysis:
Helpful for short-term trading like intraday or swing trades.
Fast decision-making based on visual cues.
Doesn’t require knowledge of a company’s financials.
Can be used across all asset classes (stocks, forex, commodities, crypto).
Cons of Technical Analysis:
It doesn’t look at what the company actually does.
False signals can mislead.
It works on probability — not certainty.
Can be overwhelming with too many indicators.
2️⃣ What is Fundamental Analysis?
Fundamental Analysis is like doing background research on a company before deciding whether to invest in it. Instead of looking at charts, you look at the company’s financial health, industry conditions, economic trends, and management quality.
The main goal is to find the true value (intrinsic value) of a stock and compare it with the current market price.
How It Works:
If the intrinsic value is more than the market price, the stock is considered undervalued and worth buying.
If the market price is more than the intrinsic value, it’s seen as overvalued, and better to avoid or sell.
Key Tools of Fundamental Analysis:
Financial Reports: Balance Sheet, Income Statement, Cash Flow Statement.
Ratios: PE (Price-to-Earnings), ROE (Return on Equity), Debt-to-Equity, EPS (Earnings Per Share).
Company's Business Model: What the company does, how it earns, and whether it's sustainable.
Management Quality: Experience and vision of the leadership.
Industry & Economy: Is the industry growing? Are economic conditions favorable?
Pros of Fundamental Analysis:
Ideal for long-term investment.
Helps understand the actual business you’re putting money into.
Less affected by short-term volatility.
Encourages rational decision-making.
Cons of Fundamental Analysis:
Takes time and effort to study.
May not tell you when exactly to buy or sell.
Requires understanding of finance, economics, and accounting.
Stock may stay undervalued for a long time despite good fundamentals.
✅ Which One Should You Choose?
It all depends on your personality, goals, and time commitment.
Go for Technical Analysis if:
You’re active and want to trade daily or weekly.
You like working with patterns and visuals.
You want to time your entry and exit precisely.
You are okay with taking risks for quick gains.
Go for Fundamental Analysis if:
You think long-term and want to build wealth.
You want to invest in solid companies.
You have patience and a stable mindset.
You prefer logic and numbers over charts.
⚖️ Can You Combine Both?
Yes, and that’s what many experienced market participants do.
This combined approach is called techno-fundamental analysis.
For example:
You use fundamentals to select a good company.
You use technicals to find the right entry point.
This way, you get the best of both worlds.
🧠 Final Thought
There’s no universal rule that says one method is always better. It’s all about what suits your style and objective.
If you’re building a portfolio for retirement or wealth over 10+ years, fundamental analysis is your friend.
If you want to trade actively and spot market opportunities daily or weekly, technical analysis is the way to go.
Over time, learning both will make you a more flexible and better-informed market participant.
Hello Guys ..
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Guys ..
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.