Skip to Content

What is fundamental and technical analysis of a stock?

Any stock has to be judged from the point of view of fundamental and technical analysis in order to qualify it as good for long term investment. The deep fundamental and technical analysis will reveal the inside story of the stock which is not known to us. Many investors invest in stocks based only on fundamental analysis. But by following only fundamental analysis for long term analysis, you may land up in losing your capital or at least your income or profit may remain stagnant for many days to come.

Fundamental Analysis

Fundamental analysis will give you picture about financial condition of the company. But sometimes companies manipulate the results and even good or excellent result does not result in stock price moving up . So when you analyse technically then you can understand that even after good result , stock is not showing any sign of bullishness (no investment comes from financial institutions, FIIs, mutual funds, insurance companies etc which are responsible for up move in any stock)

Even if company is fundamentally good, sometimes it takes much time to move up its stock price as institutions keep accumulating stocks slowly and gradually which takes time to move stock up. In this case the long-term investor, waits for few months and books loss as stock price does not move up for many months. But understand before making any big up move there is a consolidation in the stock which is nothing but accumulation by big players. So instead of buying a stock only based on fundamental analysis, we can come to know whether stock will be bullish in near future or not based only on technical analysis. So fundamental analysis tells you which company is good to buy but technical analysis will tell you which is the right time to buy that stock. You save up your capital from remaining idle for many days.

Technical Analysis

Technical analysis also tells you when to exit the stock . Whereas fundamental analysis lacks this quality. Not only better exit but better entries along with stop loss can only be given by technical analysis.

How could one learn fundamental and technical analysis?

The world in which we are living is a dynamic and there are many sources to learn about fundamental and technical analysis.

Youtube: There are millions of videos about fundamental and technical analysis available on youtube. You can access youtube videos and learn it. But problem with this is that there is information overload and there are many videos which will give you some wrong concepts and once you learn wrongly, you start losing your capital. Every youtuber will teach you different strategies and you will apply all of them in the market and you will lose your money. Everything meaningful will come up with some cost. So you have to be careful while learning from this what is called as free resource.

Books: Books are our best friends, so you can learn many things from stock market books. Books will clear all your basic concepts about stock market which is very necessary if you want to survive in the stock market.But there will be many things which will not be covered by books. So the good thing is read books and then go for mentoring.

If self learning from books make somebody successful in trading, then everyone would have become successful. So learning by self from books will not give you complete picture of the market. Here comes what is called experience in market. So you need to take guidance from someone who is well experienced and knows the nerve of the market. Avoid free workshops / trainings as they are meant only to market their trainings and get your personal data like name, email etc for their marketing. So find someone who is the best and trustworthy to get mentoring.

Trainings: Market is flooded with many stock market courses. Your job is to find which one is good and trustworthy as there are many fake tutors who are looting retail investors under the name of training.

Powered by PHPKB Knowledge Base Software