Successful trading depends on your ability to interpret market data. Two major schools of thought dominate this space: financial analysis and chart-based analysis. While both methods aim to guide your buy and sell decisions, they do so in very different ways.
Fundamental analysis focuses on the core financials of a company. This includes reviewing revenue and profit, assessing business models, and evaluating broader industry conditions. If you’re analyzing Apple or Google, for example, youd look at their R&D spending to determine whether their stock is over- or undervalued.
On the other hand, technical analysis relies on charts, indicators, and historical trends. Traders using this method often focus on tools like the Relative Strength Index (RSI), which help predict where the stock might go next. Rather than asking what a company does, they ask how its stock jpmorgan chase price behaves.
If you prefer long-term investing and believe in a companys story, fundamental analysis may suit you. But if you enjoy short-term trades and watching charts, technical analysis could be a better fit.
In reality, many traders combine both. For instance, you might use fundamentals to choose which stock to buylike Tesla for innovationand technicals to time your entry. This hybrid approach can offer the best of both worlds.
No method guarantees success, but understanding the strengths and weaknesses of each helps you become a better-informed trader.
