Fundamental analysis is a method of evaluating
a security in an attempt to measure its intrinsic
value, by examining related economic, financial
and other qualitative and quantitative factors.
Technical analysis employs models and trading rules
based on price and volume transformations, such as
the relative strength index, moving averages,
regressions, inter-market and many others.
In general, technical analysis is used for a trade, whereas fundamental analysis is used to make an investment.
Investors buy assets they believe can increase in value, while traders buy assets they believe they can sell to somebody else at a greater price.
The end goal of fundamental analysis is to produce a quantitative value that an investor can compare with a security's current price, thus indicating whether the security is undervalued or overvalued. Fundamental Analysis' determines the health and performance of an underlying company by looking at key numbers and economic indicators. The purpose is to identify fundamentally strong companies or industries and fundamentally weak companies or industries. Investors go long on the companies that are strong, and short the companies that are weak. This method of security analysis is considered to be the opposite of technical analysis. The Basics of Fundamental Analysis uses real, public data in the evaluation a security's value.
Technical analysts believes past trading activity and price changes of a security are better indicators of the security's likely future price movements than the intrinsic value of the security.
This method is used to attempt to forecast the price movement of virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures and currency pairs. In fact, technical analysis can be viewed as simply the study of supply and demand forces as reflected in the market price movements of a security. It is most commonly applied to price changes, but some analysts may additionally track numbers other than just price, such as trading volume or open interest figures.