Analysis

Analyzing data is essential. There are two ways of analyzing data - technical and fundamental. Read the charts and read the news. Have an overall view of the market in both directions and so you will be ready to dive into the financial market and make the right decisions.

Technical analysis

Technical Analysis is a way of examining and predicting price fluctuations in the financial markets. Technical analysis uses historical prices, past patterns to define the direction of the future price. It is based on the logic that if a trader is able to identify previous price patterns for certain periods of time, the trader will be able to define which pattern will repeat itself.

It is one of two physilophis of market analysis. The other one is fundamental analysis. Fundamental analysis, in contrast, takes in consideration external factors which influence assets price.

Pros of technical analysis

Identifies price trends, identifies the best entry and exit points in a market, uses different tools and indicators to find support and resistance levels. As the more buyers and sellers congregate around the same price points, the patterns will inevitably be repeated.

Cons of technical analysis

There is no 100% accurate, since there is always a market behaviour that cannot be predicted. Even if we analyse the market and identify patterns, there is no promise to success. It needs paying attention to risk management tools and indicators.

Fundamental analysis

Fundamental analysis is a way of evaluating an asset’s value by analyzing the external factors that might influence its price. This analysis is based on external factors, financial statements, and industry trends.
The fundamental analysis comes hand in hand with the technical one. If technical one derives its results from charts, fundamental one looks at outside factors that make the prices go up or down.

Pros of fundamental analysis

It gathers all information the trader needs to make the right decision. Tries to understand the value of an asset so that traders will have a long-term view of the market. Financial data compared to external factors will bring better decisions.

Cons of fundamental analysis

It is time-consuming, requires many areas, and sometimes is very complex. Various times the results of fundamental analysis are not suitable for quick decisions. It is not practical for deciding entry and exciting points. Sudden political, legislative, economic events would make it useless.