Technical analysis

Technical analysis focuses on the movements made on the charts. Those who favor this style of analysis when making investment decisions look at the movements seen on charts, and then try and find trends that help them make predictions.

Technical analysis is helpful for active traders, who watch chart movements closely and enter and exit positions when they see certain trends, or when trend lines hit a certain point on the chart.

This type of analysis can mean riskier decisions, as they are often based on what’s “hot” at the moment. Technical analysis is particularly popular among currency traders. However, a combination of technical and fundamental analysis can be a good way to choose investments for a mid-range length of time.

Post from: EveryJoe

Investing: Technical Analysis

Fundamental analysis

This is a type of analysis in which you look at the fundamentals of a stock, index, fund, REIT, bond, currency or commodity. No matter what you are looking at, you study the underlying factors that affect whatever it is you are investing in. In the case of a stock, you would look at the company. Is the management competent? How is the cash flow? Is there room for future growth? If the answers are positive, this a company with solid fundamentals that could make a good investment choice.

Fundamental analysis works well for investors with a lower risk tolerance. It allows them to make solid choices that are likely to be compatible with a long-term buy and hold investing strategy.

Post from: EveryJoe

Investing: Fundamental Analysis