Differences between technical and fundamental analysis

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Anyone who is going to invest their money in the stock markets should consider at least some of these investment strategies. Either it is based on a technical analysis or, on the contrary, on a fundamental analysis. They are totally different systems pero que los dos se pueden complementar. Sea cual sea el caso, son dos puntos de apoyo que tienes en el momento de abrir o cerrar posiciones en bolsa. No en vano, te darán una mayor seguridad en las operaciones de ahora en más. Que es, posteriormente de todo, de lo que se trata.

As you may have experienced in your few or many years of investing, there is a profile of users who prefer technical analysis to fundamental or vice versa. As financial intermediaries, they choose one or another analysis system, depending on their priorities. In principle, neither the analysis is better nor worse than the other. If not, on the contrary, they focus on substantially different realities. In this regard, it is very important that you have defined what your aspirations are to choose 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 u otros activos financieros. Esto se debe a que es mucho más fácil atender estas explicaciones y no a los datos fundamentales de las compañías cotizadas, que por otra parte requieren una mayor preparación en el sector empresarial y a tal efecto solo los profesionales pueden llevar adelante estas tareas tan especiales. Por ahora, su principal target debería ser en qué consisten ambos sistemas de análisis.

Technical analysis: detect 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 is simply to detect what is the real state of stocks or other financial assets. Not surprisingly, it is based on a market action study, mainly through the use of charts, in order to predict what its behavior will be during the next trading sessions. As a result 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 primarily 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 using graphics. Where a wide range of figures, levels and areas are represented that will help you to better understand what is happening in equities. In particular, in movements aimed at shorter terms.

Help to make purchases

Technical analysis is undoubtedly an exceptional support for you to execute your purchase orders. Among other reasons because it will help you to know with great reliability what is the price level where you should have access to financial markets. You have greater guarantees to obtain these objectives, fundamentally if you compare it with other much more complex analysis systems. To the point that many euros can be saved in each of the operations carried out under this basic system. Even though you should also know that it is not a totally infallible program. Not much less.

Anyway, you will have no choice but to have some learning in this analysis technique. Beyond other fundamental considerations, as you can imagine from the beginning. Whatever the case, the information derived from the technical analysis will leave you more prepared so that you can develop your purchase and sale operations henceforth. To the point that they will tell you which are the best values of the moment and therefore you must open positions in them. Or on the contrary, if it is 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. In other words, it shows what the real trend of a security, sector o índice bursátil. Si es alcista, bajista o inclusive lateral. No en vano, te estará dando información de especial relevance para que puedas tomar tus decisiones en los mercados de renta variable. En un sentido u otro, como es lógico pensar desde este enfoque de inversión. En este aspecto, estarás jugando con cierta ventaja si las operaciones se realizan en los periodos más cortos de permanencia.

On the other hand, it can also reveal the intensity of movements. In other words, if they are going to be of short duration or if, on the contrary, they have a more intense route from those moments. From this analysis perspective, 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 of hundreds and hundreds of small and medium investors who choose 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 specific circumstance what is taken into account is the commercial entity of the listed company. Because in effect, fundamental analysis is first of all a very particular methodology of stock market analysis, and that aims to establish the true value of security or stock, 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 complicated analysis as you will see right now.

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 each other, even though in any case it is data that you can complement wonderfully from now on. To the point that they will give much more security in each of the operations you execute. Whatever the case, you should pay attention that this analysis system needs 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 circumstance it is more useful for operations without any type of expiration. Where you will be able to keep your investments at the height of the terms you want at all times. From this point of view, you cannot be wrong if you say that it is a fundamental analysis it is much more complete than the technical. Even though the most complex thing is that you can interpret it correctly. Not surprisingly, one of the biggest problems that its use implies 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 that you can run with the application of this very special system.

Not surprisingly, it cannot be forgotten that it consists of a methodology that ultimately tries to calculate the real value of a security. through balance sheet analysis and compares it with the market value. From this dynamic, you are in optimal conditions to reveal whether the price of some shares is cheap or expensive. Because through this system, financial intermediaries offer information as important as the target price of the shares and that is renewed from time to time. Whatever the case, it is data that helps you to know what the company's share levels are.

As you have seen, there are different methods that can be applied depending on the profile you present. But also in terms of knowledge, each of these two analyzes must be interpreted. Not surprisingly, it is something in which the opportunities of small and medium investors can differ. Because it is not surprising that some users prefer for one method and others for the rest. Finally, something that must be paid attention today, both analyzes are methods to make profitable savings with greater guarantees of success. Beyond other considerations in the interpretation of stocks in the stock markets and that is one of the main objectives of investing in the stock market.