Investing in success, making money on stocks and accumulating wealth is everyone’s main goal. To achieve this ultimate goal of retirement you need an investment strategy that will make your money work for you and at the same time avoid excessive risks, failures and losses. Technical analysis and fundamental analysis are two key points of financial success, but they differ greatly in their approach to investment.
Fundamental analysis focuses on the financial statements, the actual data of the company being evaluated. To estimate stock value, fundamental analysis uses earnings, earnings, future growth, return on equity, profit margin and other data to determine a company’s value and potential for future growth.
While fundamental analysis is important, most investors do not have the experience, desire, or time to study a company’s financial information in trying to determine if it will be a good investment or not. And the accounting tricks that some companies have introduced to prepare books, the basics may be seemingly unnecessary.
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Technical analysis, on the other hand, is a method of valuing securities by analyzing statistics obtained as a result of market activity, such as past prices and volume. Some technical analysts do not try to measure a company’s intrinsic value, but instead use charts and other tools to determine patterns that can predict future price movements.
Technical analysis was introduced by Charles H. Doe more than 100 years ago from a series of editorials in the Wall Street Journal that he wrote and later became known as Doe Theory. The main factors of his theory have been performed for over a century and are the basis of technical analysis today. The Dow believed that the market is reducing everything, and this information is reflected in the price movement of not only the general market but also individual stocks. Instant access to news in today’s world is cemented by the fact that everything is really reduced in stock price and market movement.
However, a wise investor should always use a dual approach to succeed. In other words, use some common sense. The company’s basic, well-known fundamentals are readily available and disclosed in terms of price to earnings (PE) and earnings per share (EPS). To avoid night companies that don’t have real profits, make sure the EPS and PE ratio match before you risk the money you earn. Then with proper knowledge of the technical analysis of the company and the common market you can make a really wise investment decision.
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There is an old saying, “If you want to know the truth, go for the money.”
This is true; charts are a trace of money. Technical analysis of charts not only reveals the current and past performance of the stock, but also the price action gives the chart a clear idea of market sentiment and a valuable idea of the future. All the necessary information is displayed on the chart.
Price, volume, support, resistance, trends and more. The point is simply to be proficient in the correct interpretation of information. Graphing and technical analysis uses the foundation of Dow theory and introduces modern charting techniques to give the investor a clear advantage. In this way, an informed investor can limit risk and invest at the most convenient time, avoiding market crashes, market adjustments and bear markets. Using time-tested analysis, available fundamentals and common sense, an individual investor can succeed in any market.
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