Trading Basics
Fundamental vs. Technical Analysis
Both schools of analysis serve different purposes — fundamentals set direction, technicals time the trade.
Key rules
- Fundamentals assess intrinsic value; technicals time entries/exits
- Short-term traders rely more on technical signals
- Long-term traders anchor positions with fundamental context
- Neither approach works in isolation for all conditions
- Macro news can override technical setups in the short term
Fundamental analysis examines a company's financial health, earnings, and macro conditions to determine intrinsic value. Technical analysis studies price and volume patterns to forecast future movement. Most professional traders use both — fundamentals for direction, technicals for timing.
For short-term trading, technicals dominate. For multi-month positions, fundamentals provide the broader thesis.