Technical Analysis v.s. Fundamental Analysis: Which one is better?

Technical Analysis v.s. Fundamental Analysis: Which one is better?

What is Technical Analysis?

Technical analysis is a graphical analysis which would determine the direction of an asset’s price in the future. They rely on information about the price movement from the past. This method of analysis can be used in many different markets, which may include stocks, gold, and cryptocurrencies. Analyzers can also determine the time frame they would like to study as well.

The key factors that are necessary in technical analysis are high liquidity, uninterfered price, and free of manipulative news. If any of these factors are missing, performing a technical analysis would be ineffective.

Prominent Point of Technical Analysis

There has been a saying that all factors of an asset are reflected in the graph. Performing a technical analysis is considered as a very convenient way of analyzing an asset, because an individual can directly analyze the prices which would provide them with numbers that could determine the future price of an asset. This can help them form investment strategies for both long term and short term.

Disadvantages of Technical Analysis

Technical analysis requires experience with a specific profession in the field of statistics and graphical analysis to understand trends and price movements. An individual would also have to understand the utility of certain analytical tools which would aid in the analysis of an asset, such as the Relative Strength Index (RDI), Moving Average (MA).

What is Fundamental Analysis?

Fundamental analysis is the analysis of the background of an asset, such as the economic condition, society, politics, supply and demand, and certain news that may affect the price of an asset. Individuals who perform fundamental analysis are also known as “News-based Traders.” Fundamental analysts would usually perform analysis on certain news which may include the factors mentioned earlier.

Fundamental analysis is an examination performed to find opportunities to invest in assets with high growth potential, based on the factors mentioned.

Prominent Points of Fundamental Analysis

Fundamental analysis is an analysis of the potential growth of an asset's value in the future, therefore it is suitable for long term investment. It also gives investors a better understanding of the asset and the overall picture of the market.

Disadvantages of Fundamental Analysis

Fundamental analysis takes a lot of data to analyze, such as the overall perception of the assets by the public, economic conditions, news, etc. This information usually does not affect the price in the short term, therefore fundamental analysis is not suitable for short-term investments.

In conclusion, which is the better form of analysis?

According to statistics, regardless of whether an individual uses technical analysis or fundamental analysis, many professional analysts are successful with their investments using their preferred method of analysis.

Additionally, an individual could use both methods of analysis to aid in their decision making process for their investment to gain an even more effective outcome. For those who just started investing, the best option is to study both analytical methods to aid in their investment decision.


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