Trading Analysis

Market analysis is the most effective method for understanding the market and making wise choices. It also assists in examining the market and its competitors. For instance, if a business introduces a new product, market analysis enables you to observe the behavior of competitors.

Technical analysis entails examining the assets’ historical data and identifying patterns, including how they repeat, when they repeat, and why the asset exhibited that particular behavior.

This enables the trader to make an accurate prediction about the asset’s near-term price. There are packages of charts that present asset prices in a graphical format that is easy for experts to analyze.

Technical Analysis

Technical analysis is the examination of market behavior through the use of charts in order to forecast future trends. Market action refers to the three primary sources of the available information – price, volume, and open interest.

The purpose of technical analysis is to forecast the price movement of any tradable asset that is subject to supply and demand forces. While technical analysis is frequently based on price changes, some analysts also monitor other data points such as trading volume or open interest.

Technical analysis is predicated on three major principles:

1. Everything is discounted by the market.

Technical analysis is frequently criticized for failing to consider fundamental factors. According to technical analysts, everything from the company’s financial situation to external factors is already factored into the stock price. As a result, they believe there is no reason to consider external factors separately.

2. Price trends

Technical analysts believe prices follow a short, medium, or long-term trend. And so on. Stocks are more likely to follow past trends than break them.

3. History repeats itself

Analysts say history tends to repeat itself. Technical analysis uses chart patterns to understand trends and emotions. Many forms of technical analysis have been used for over a century and are still considered valid.

Fundamental Analysis

Using fundamental analysis, you can track changes in financial markets. For stocks, it considers public data like revenues, earnings, future growth, and return on equity to assess the company’s future potential. Economic Calendar is one of the tools that inform you of upcoming financial events.

Fundamental Analysis, Quantitative and Qualitative

When we talk about fundamentals, we mean anything that relates to a company’s financial health. It includes metrics like revenue and profit, as well as market share and management quality.

Fundamental factors are classified as quantitative or qualitative. They mean the same thing when it comes to fundamental factors. Let us review the definitions:

Quantitative – quantifiable or numerical.
Qualitative – relating to or based on something’s character rather than size or quantity.

Quantitative fundamentals are numbers, in this sense. They are a company’s measurable traits. As you might expect, financial statements are a major source of quantitative data. Revenue, profit, assets, and more can all be calculated precisely.

Qualitative fundamentals include key executive quality, brand recognition, patents, and proprietary technology.
Business model, competitive advantage, management, and corporate governance are qualitative fundamentals to consider.
Quantitative Fundamentals: balance sheet, income statement, and cash flow statement.