What are the benefits of technical analysis versus fundamental, and why should we learn technical analysis?
The first advantage is flexibility and compatibility with all markets
One of the biggest strengths of technical analysis is its compatibility and diversity for different types of transactions in different time dimensions. There is almost no market and trading space where these principles cannot be applied.
A chartist can easily study any market he or she wishes, even if it does not match his or her fundamental knowledge. While most fundamental analysts, because there are always large amounts of information and financial statements to consider that they need to act as an expert to understand, they can’t get too far away from where they are.
For example, by learning technical analysis, you can quickly switch from auto group to pharmaceutical group whenever you want, but a fundamental analyst must first examine many financial statements in order to choose the right stock to buy. With this low speed of action, the fundamental analyst loses a lot of market fluctuations and profits, but it is the technical analyst who, with his intelligence and intelligence, and of course with a quick and flexible tool such as technical analysis, has been able to make more profit.
The second advantage – usable for different time periods
One of the biggest strengths of technical analysis is that it can be used over a period of time. Whether day traders, multi-day traders, short-term traders, medium-term buyers, and long-term traders can benefit from technical analysis. In fact, technical analysis does not involve a specific time, and it is the taste and method of the trader’s business. In what period to analyze.
The technical analyst determines how long he or she intends to forecast by determining the time frame. It is not at all true that some people say that technical analysis is used only for short periods of time.
This claim may be due to the theory that fundamental analysis is used for long-term forecasting and technical analysis factors are short-term factors. In fact, the technical analyst uses monthly and annual weekly charts to predict long-term intervals depending on his own taste and because of these techniques. This type of analysis is called technical.
The third advantage – technical analysis is a shortcut to a fundamental stock review
As in technical analysis, the focus is on price changes. In fundamental analysis, it is economic factors that affect supply and demand, causing prices to rise or fall or remain constant. A fundamental analyst examines the effect of all relevant factors on stock prices so that he or she can ultimately calculate its intrinsic value.
Intrinsic value is what a fundamental analyst demonstrates whether or not that price is really worth the price. If the stock price is below the intrinsic value, the fundamentalist analyst says that the price is cheap and suitable for buying, and vice versa.
Both technical and fundamental methods always try to solve a single problem, and that problem is nothing but predicting where prices tend to go. In fact, they address the same issue in two different ways. A fundamental analysis examines the causes of price changes, while a technical analyst challenges its effects. The technical analyst believes that price change is the only thing he needs to know, and that it is not necessary to know the causes and reasons for these changes, while the fundamental analyst always pays attention to the causes and reasons for price changes.
Most traders categorize themselves into one of two categories: fundamental or technical analysts. In fact, these two categories have a lot in common. Many fundamentalist analysts try to learn the basics of technique, and many technical analysts try to have at least some knowledge of fundamental issues.
The main problem is that often the causes and charts are intertwined. In most cases, at the beginning of important market movements, a fundamental analyst cannot provide a correct definition for market change. It is at such critical junctures that both analysts see many differences in their perceptions and price trends, and often understand the reason for the changes at the same time, but sometimes it is too late to react.
These apparent differences may be explained by the fact that price changes actually create new underlying causes, that is, price changes cause the fundamental analyst and his measurement factors to become sensitive, and in fact the market finds new reasons for these changes. While the underlying causes have already affected the price and are already on the market, the prices are actually reacting to the new underlying causes. Many markets have started with very little or no fundamental change in the past, and over time, as the changes have been seen, the new trend is well on its way.
After a while, the technical analyst understands and reads the changes in the charts with more confidence. A technical analyst may be the only one who feels comfortable and even enjoys such a situation when market changes are in conflict with public wisdom. He knows that market traders will soon be confronted with new information, which is the new fundamental reason, and perhaps he is the only one who has not waited for confirmation of his calculations.
In confirmation of technical analysis, it can be clearly seen that a technical analyst believes in his or her analysis far more than a fundamental analyst. If a trader has to choose between the two as a way of working, logic says that with technical analysis, the chances of success are higher. Because technical analysis actually examines the impact of fundamental factors, and because the fundamental effect on price has always been taken into account, it is certainly necessary to examine fundamental work.
In fact, the study of diagrams is a shortcut to the study of fundamental factors. But the opposite is not possible. It is possible to make a purchase in a financial market solely on the basis of technical knowledge, but it is almost unlikely that a person will be able to make a very successful purchase and sale solely on the basis of fundamental issues and a lack of market research.
Published and authored by FalconProfit.com
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