Fundamental Analysis
Fundamental analysis involves assessing the economic well
being of an entity, not taking into account its price movements. For traders in
the stock market, they would take a look at the company’s earnings, expenses,
assets, and liabilities. Fundamental traders will use those data points to
determine the health of the company. If their economic well being is trending
better as their company’s earnings and balance sheet is growing, then
fundamental traders may buy the firm’s stock in anticipation of demand growing
for that firm’s stock.
Technical Analysis
Technical analysis involves pattern recognition on a price
chart. For equity traders, they will analyze the price of volume of the shares
traded on the exchange. If prices are moving higher on increasing volume,
traders will see the demand for shares of that company’s stock and buy.
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