Batman vs. Superman. Godzilla vs. Kong. Technical Analysis vs. Fundamental Analysis. Each are strong on their own. One perhaps stronger than the other depending on the situation and who you ask.
When it comes to the markets, both technical and fundamental analysis methods are used by investors around the world for researching and forecasting future trends in stock and crypto prices.
They are different from each other in the sense that while fundamental analysis is based on intrinsic value, technical analysis is based on historical price movements and patterns.
A trader who applies fundamental analysis will evaluate factors (or fundaments) that are capable of influencing the price of the stock or cryptocurrency, such as economic, financial, and other relevant factors. They are concerned with the difference between a stock or cryptocurrency’s value and the price at which it’s currently trading at.
A trader who applies technical analysis on the other hand can ignore the factors that may influence the companies value, they instead will study the historic price movement and patterns of the stock or cryptocurrency. They will analyze the past trends and predict future prices accordingly. Patterns often repeat themselves because investors often behave in the same way in the same situation.
Which method is better? Like Batman and Superman, both can have their place. Fundamental analysis is thought to be most useful for long term investments, while technical analysis is more useful for short term trading and market timing. But what if the two worked together? Like Batman and Superman did to defeat Doomsday, or Godzilla and Kong did to destroy Mechagodzilla? I personally use fundamental analysis when picking stocks and cryptocurrency, then I use technical analysis to decide if and when to buy them. I also use technical methods to trade when a stock is consolidating within its range.
While the debate over which method is better will continue until the end of time, why settle for one when you can use both? Let me know which methods you favor when deciding your future investments!
Thank you for your time! I hope you enjoyed this over simplified definition of technical and fundamental analysis. If you found this article interesting or helpful in any way please let me know in the comments below. Feel free to follow me for more articles on how I invest or how I earn other free rewards such as crypto, stocks, or gift cards.
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*Disclaimer- I am not a certified financial planner/advisor, certified financial analyst, economist, CPA, accountant, or lawyer, or anything important for that matter. The contents of this article are for informational, educational, and entertainment purposes only and do not constitute financial, accounting, or legal advice. Always do your own research.*
