Fundamental and Technical Analysis

Fundamental and Technical Analysis are terms that describe two different approaches used for researching and forecasting the future growth trends of stocks.

Fundamental Analysis

Fundamental Analysis is a method of evaluating a company by determining the intrinsic value of the company’s stock. Fundamental analysis factors in overall economic and industry conditions along with the financial condition and management abilities of a company. Fundamental analysis involves looking at company data (earnings, expenses, assets, liabilities, etc.) that can be expected to impact the price or perceived value of a stock. Fundamental analysts look at this past performance data for signs about the potential future performance.

Technical Analysis

Technical analysis is the science and art of interpreting a stock chart. Technical analysts do not consider a company’s intrinsic value, but instead use stock charts to identify patterns that can suggest what a stock might do in the future. Technical analysis is very much about spotting a stock's trend and making sure that you are on the correct side of that trend.