Let's Learn To Play Stocks: Differences in Fundamental and Technical Analysis

Technical Analysis

As an investor, profit is certainly the main goal that you want to achieve. Therefore, it is very important for investors to recognize the shares to be purchased by conducting various analyses such as fundamental and technical analysis. However, what is the difference between the two and which analysis is better used?

Fundamental analysis is an analysis based on the condition of a company, economic conditions and related industries. Fundamental analysis generally uses company indicators listed through the company's financial statements such as Price to Earning Ratio (P/E), ROE (Return to Equity), and others. The world's leading investor, Warren Buffet, believes in fundamental analysis in investing. Fundamental analysis is often used by long-term investors such as Warren Buffet to sift through stocks that fall into good categories.

Meanwhile, technical analysis is an analysis based on data on historical prices that occur in the stock market. In the application of technical analysis, predictions to buy or sell stocks are made by looking at historical charts of stock movements. Users of technical analysis are commonly referred to as traders who make short-term investments such as investments on a daily basis. One of the most famous users of technical analysis is George Soros.

Then, which analysis is better to use?

Each analysis has its own advantages and risks. Investors have their own methods of determining the purchased shares. Technical analysis is a good method to analyze the current market conditions and invest in a short period of time. Meanwhile, the average fundamental analysis voter is an investor who has high confidence in the business conducted by the company will determine the price of the company so that they are not affected by fluctuations in the share price in the short term and tend to invest in the long term. In addition, there are also investors who choose to combine the two analyses in conducting transactions. Ultimately, the best analysis to use in an investment depends on the investor's own investment style.

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