Fundamental Traders and Technical Traders



Two of the most common methods of analysis that may be conducted when day trading or long-term trading are fundamental and technical. Although the way they use the information is entirely different, these forms work from the same data. Even if it is possible to use fundamental and technical analysis together, it is more common for a trader to select one or the other.

Fundamental traders

Fundamental traders believe that they can predict future market prices based on market happenings and that the markets will react to events in certain ways. Let’s say, if a company gets regulatory approval for a new product, a fundamental trader might anticipate the company’s stock price to increase. On the contrary, if a company has a financial scandal, a fundamental trader might anticipate its stock price to drop. Fundamental traders must have access to all of the accessible information as soon as it is available, and as a result, institutional traders frequently have large support teams.

Fundamental analysis has traditionally been done manually and is as old as trading itself. However, as computing power upsurge, it has become possible for some fundamental information to be dealt with automatically.

Why fundamental traders think their method is better

Many fundamental traders believe their method is better than technical traders. Many fundamentalist traders think that technical trading is way too complicated. Fundamental trader choose to depend on actual company revenues, profits, cash flows, assets and liabilities. Fundamental-based investors see charts as nothing more than a presence of true facts and numbers. Fundamental traders are also keeping an eye on the current products, brokerage, assessments and government statistic.

The downside

The fundamental outlook is anything but engraved in stone. The supposed existing numbers can be adjusted, manipulated and interpreted in any number of ways. Fairly often, the majority of information on how those "facts" are played out in the price of shares. You always hear on the news that stocks lifted higher or dropped based on some news or event. Most traders have little idea on how the fundamentals are really affecting price movement, they play follow the leader and that is one market impulse. It is wrong to think that most investors understand the same fundamental data in the same way.

Technical traders

Technical traders use stock charts and other trading information, such as previous rates and trading capacity, along with mathematical pointers to make their trading decisions. This type of stock trader depends on factors including pattern, momentum, moving averages and more. The basic standard is that all asset movements are based on offer and demand more than anything else.

Specific formations and price relationship occur regularly when viewed from a technical viewpoint.These formations happen quite often, as head and shoulders, tops and bottoms, double and triple, price channels and triangles. Together with price breakouts and failures, lower highs and higher lows, price is reliable in testing itself. Support and resistance price points act as magnets. Stock prices are continuously testing previous price action. The result decides further price action, which progresses over time into some kind of measurable movement.

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