Stock Market Forecast: Fundamental and Technical Analysis
Market forecasting is a challenging part of stock market analysis, as market prediction has become the most complex task of an analyst. Market forecasting helps a trader choose the type of security, when to buy or sell a security, and how much to invest in that security.
The type of analysis used by traders or market analysts falls into two main categories:
1. Fundamental analysis
2. Technical analysis
The above two methods are based on certain information that comes from various sources of news, analytical data or investment charts.
Fundamental analysis-
Fundamental analysis involves a careful study of the financial operations, the economic situation, the assets, the debts, the management, the products and the completion of the business. Thus, the fundamental analysis is based on the study of the financial and sector information of a company to predict the movement of the price of its shares. Fundamental analysis is often useful in long-term investing and is not highly trusted by intraday traders. However, some believe that studying fundamentals and technicals simultaneously may be better for day trading.
Technical analysis
Technical analysis is the method of evacuating values by analyzing stock charts. It includes the analysis of market data, volume and open interest to predict the future trend of a stock. Analysts study the past performance of the company and study the charts to analyze if there are any patterns in the price of that security. Information about a stock’s price, volume, and other important information can be displayed in a graphical box. There are several software programs in which the study of such a graph can be done very efficiently and easily to study patterns and trends. These patterns are also used to determine when to buy or sell a security.