Anyone who is going to invest their money in the equity markets will have to consider at least some of these strategies in investment. Either it is based on technical analysis or, on the contrary, on fundamental analysis. They are completely different systems but that the two can be complemented. In any case, they are two points of support that you have at the moment to open or close positions in the stock market. Not surprisingly, they will give you greater security in operations from now on. Which is, after all, what it is all about.
As you may have experienced in your few or many years of investment, there is a profile of users who prefer technical analysis rather than fundamental or vice versa. Like financial intermediaries, they choose one or another analysis system, depending on their priorities. In principle, neither analysis is better or worse than the other. If not, on the contrary, they are based on substantially different realities. In this sense, it is very important that you have defined what your aspirations are to select the most appropriate and correct analysis.
If you look at digital investment platforms you will see that most analysts use technical analysis to carry out their stock market predictions or other financial assets. This is because it is much easier to attend to these explanations and not to the fundamental data of listed companies that, on the other hand, require greater preparation in the business sector and in this sense only professionals can carry out these. such special tasks. For now, your main objective should be what both analysis systems consist of.
Technical analysis: spot the moment
The first of the analysis systems, and it does not have to be the most important, is the so-called technical. Well, technical analysis basically consists of detecting what the real state of stocks or other financial assets is. Not surprisingly, it is based on a market action study, mainly through the use of graphs, in order to predict what its behavior will be during the next trading sessions. As a consequence of this important characteristic, there is no doubt that it is the best system to know what the entry and exit level is in any of the financial markets.
Technical analysis is used above all in short-term operations and is very relevant for adjusting prices. Both in purchase and sale operations. This is a substantial difference from fundamental analysis. For your information interpret these movements You will have no choice but to visualize them through graphics. Where a wide range of figures, levels and areas are represented that will better help you to know what is happening in equities. Especially in movements aimed at shorter terms.
Help to make purchases
Without a doubt, technical analysis is an exceptional support for you to execute your purchase orders. Among other reasons because it will help you to know with great reliability which is the price level where you should enter the financial markets. You have greater guarantees to achieve these objectives especially if you compare it with other much more complex analysis systems. To the point that you can save many euros in each of the operations carried out under this basic system. Although you should also know that it is not a completely infallible program. Not much less.
Of course, you will have no choice but to have some learning in this technique of analysis. Beyond other fundamental considerations, as you can imagine from the beginning. In any case, the information derived from the technical analysis will leave you more prepared so that you can develop your purchase and sale operations from now on. To the point that they will tell you which are the best values of the moment and therefore that you have to open positions in them. Or on the contrary, if the ideal time to undo the positions. They also tell you if a security is overbought or oversold, for example.
Stock trend
But if technical analysis is characterized by something, it is by its high predictive power. That is, it shows what is the real trend of a security, sector or stock index. If it is bullish, bearish or even lateral. Not in vain, it will be giving you information of special importance so that you can make your decisions in the equity markets. In one sense or another, as it is logical to think from this approach to investment. In this sense, you will be playing with a certain advantage if the operations are carried out in the shortest periods of permanence.
On the other hand, it can also reveal the intensity of movements. That is, if they are going to be short in duration or if, on the contrary, they have a more intense journey from those moments. From this perspective of the analysis, it can be said that the technician is a very reasonable support for you to carry out your decisions with greater guarantees of success. So think thousands and thousands of small and medium investors who opt for this system to configure and manage their investments. In a way, it is a program for you to invest money in the stock market without any sense. As it will have happened to you on more than one occasion.
Fundamental analysis
Another very different analysis is the fundamental one since in this particular case what is taken into account is the business body of the listed company. Because in effect, fundamental analysis is above all a very particular methodology of stock market analysis, and that aims to determine the true value of the security or action, called core value. With such relevant data, such as its debt, book value or many others that indicate the situation of the company that is listed on the equity markets. However, it is a much more complex analysis as you will see from these precise moments.
Because this system that is used in the bag abounds in what are the business results and not in the trend of their actions. It has nothing to do with one another, although of course they are data that you can complement perfectly from now on. To the point that they will give much more security in each of the operations you execute. In any case, you must bear in mind that this analysis system requires much more knowledge than the technical one. Not all investors will be in a perfect position to interpret the data provided by this comprehensive analysis.
Target share prices
Unlike technical analysis, in this case it is more useful for operations without any kind of maturities. Where you can keep your investments up to the terms you want at each moment. From this point of view, you can't go wrong saying is fundamental analysis it is much more complete than the technical. Although the most complicated thing is that you can interpret it correctly. Not in vain, one of the biggest problems that its use entails is that you can make a mistake and therefore carry out some operations on the stock market that can be very harmful to your personal or professional interests. This is one of the biggest risks you can have with the application of this very special system.
Not surprisingly, you cannot forget that this is a methodology that ultimately tries to calculate the real value of a security. through balance sheet analysis and compares it with the market value. So that in this way, you are in optimal conditions to reveal whether or not the price of some shares are cheap or expensive. Because through this system, financial intermediaries offer information as important as the target price of the shares and which is renewed from time to time. In any case, it is a piece of information that helps you to know what the levels of the company's shares are.
As you have seen, they are different methods that can be applied depending on the profile you present. But also with regard to the knowledge you have to interpret each of these two analyzes. Not surprisingly, it is something in which the possibilities for small and medium investors can differ. Because it is not strange that some users opt for one method and others for the rest. Finally, something that you have to take into account at this time, both analyzes are methods to make the savings profitable with greater guarantees of success. Beyond other considerations in the interpretation of shares in the stock markets and that is one of the main objectives of investing in the stock market.
I understood that fundamental analysis is the most traditional, you handle the information very well, thank you for clarifying doubts, now I have more knowledge of both, we must take advice from the experts. Currently, we also have a young trader named Fernando Martínez Gómez-Tejedor, who has demonstrated in his career excellent strategies in the business world and with great quality as a human being.