What is Technical Analysis?
Technical analysis involves analysing the charts and looking for information like prices, volumes, levels, patterns and open interest in order to predict the future price movements based on the previous behaviour of stocks. Technical analysis can be carried out upon any period of interval of time as per your requirements. An investor who is looking forward for to park his money for the long run might consider the 1 day or 1 week candles while an intraday trader might be interested in the 1 min ,5min ,15 min etc intervals based on his trading setup.
We use technical analysis to get an estimation of where the price of particular stock, index or index is heading to based on calculations performed on the prehistoric data.
A good understanding of price action , levels and application of technical indicators with a proper risk rewards rations and a control over your emotions is all that is need to be successful at day trading.
What is Fundamental Analysis?
Fundamental analysis is the process of evaluating the company based on its financial data, socio economic factors, competitor analysis ,management track record, goodwill etc to calculate the expected price targets for the long run. Fundamental analysis helps us to derive at an intrinsic value for a stock and helps undertake an informed decision before getting invested in it.
Most of the times ,the market price of a stock tends to adjust itself towards the intrinsic value.
If the market price of a stock is below its intrinsic value ,then an investor would consider purchasing the stock if he believes that the company would overcome the present pricing and to rise up and move towards its intrinsic value and vice versa.
Technical analysis is a tool that gives you signals for entry and exit based on prehistoric prices and levels.
It is more suitable for trading purposes and for finding good entry points while investing.
Fundamental analysis as the name says helps identifying the potential pricing that can be achieved by the stock based on its past performance, financials, socio economic conditions etc.