It’s not wrong to compare two types of analysis of the financial markets, but the comparison doesn’t produce many similarities. The only strong connection these two have is that they are focused on finding data that would result in a prosperous trade on one of several online trading markets.
This form of analysis works on all of the three major online trading markets (Forex, Stock market, and Binary options) but we will avoid mentioning binary options. The reason for this is the existence of the 1G Profit System. This is a highly advanced trading robot that performs the technical analysis instead of the trader. This makes the study almost obsolete, and thus we won’t waste words on it.
Basics of the technical analysis
It will be hard to talk about highlights of the technical school of thought without making a comparison with the fundamentalist approach so that we will make some lines between these two. The first connection comes in the form of the timeline on which these two schools focus their research. Unlike fundamental approach which focuses on long-term trades, the technical analysis places a focus on short-term trades through analysis of the charts.
The Analyst researches the charts to determine the intrinsic value of the stock through deduction of the future projected cash flows from the presented value of the company. Analysts don’t pay attention to financial statements of the company as everything about the value of the stock is found at its current price. They use stock charts to read the info that the stock presents, and that is enough to deduce the intrinsic value of the same.
Is technical analysis a useful school of thinking?
Many prominent traders that earned millions of dollars consider technical analysis as a waste of time. Professional traders whose investments involve tens of thousands of dollars also prefer fundamental approach as they profit from holding the shares for longer than six months.
You probably aren’t one of those people, and thus you won’t profit from fundamental approach as much as others do. The technical approach is better for short-term trading, and you will probably do that to move the money as fast as it is possible.
Technical analysis is perfect for individuals that prefer short trades as it works well in determining the intrinsic value of stocks for short-term trades. The accuracy of the results isn’t as good as in the fundamental approach, but it is accurate enough for trades that technical analysts are investing their money in.