| There's a wealth of information out there for you to | | | | much more easily because you won't be worried |
| wade through, some people say you should do it one | | | | about what the price will be in another 10 years time. |
| way and others say something else is better. One of | | | | The higher number of buy and sell orders will raise |
| them must be wrong surely. Well in numerical terms | | | | your commissions however. |
| just through sheer chance one is likely to work | | | | The pitfall of technical analysis is the assumption that |
| better but often a lot of what people say has merit | | | | you can find patterns in the market and these will |
| and different methods suit different personalities. | | | | make you money. It's not the pattern that makes |
| Fundamental analysis is often coupled with value | | | | the money, it's the reason behind the pattern. Even |
| investing and works on the basis that the stock | | | | random sequences can exhibit patterns, but that |
| market has risen overall over 50 to 100 years or | | | | doesn't mean you can predict if the pattern will |
| more, and by buying undervalued companies you get | | | | continue with the next flip of the coin. |
| those two advantages. A market that rises overall, | | | | The ironic thing is that if a lot of other traders follow |
| and a company that should revert to it's real value, | | | | a certain technical analysis method it will generate a |
| as well as the dividends that the stock will pay to | | | | new pattern which you may identify that has the |
| you over many years. Fundamental analysis can be | | | | potential for profit. These traders themselves may |
| dull, just looking at numbers, news and potential | | | | barely break even sometimes but they influence the |
| management or product issues, and it's difficult to | | | | patterns that are created in the market. There are |
| know if your decision will turn out to be right in 10 to | | | | some systems that track things such as big |
| 20 years time. A lot of things can also happen to a | | | | institutional trading companies because they wield so |
| company in that time so you generally need to be | | | | much money and can potentially generate tradeable |
| sure you're buying into a company with a real | | | | patterns by themselves. Whenever you think you've |
| advantage in their market. With fundamental anaylsis | | | | found a good trading pattern always try and justify |
| your cash will be invested most of the time, meaning | | | | why it might exist, and if you can't then proceed to |
| you'll have very long periods where you have to find | | | | test it cautiously. |
| other things to do, unlike technical anaylsis which will | | | | The most important thing you can do with any |
| be like having your own business and analysing | | | | system is track your reasons for buying and selling in |
| markets and news every day of the week. | | | | a consistent manner so that you can improve your |
| Technical analysis looks at why stock prices | | | | techniques over time and avoid costly mistakes. |
| themselves actually move over a shorter period of | | | | Especially making the exact same mistakes over and |
| time. The benefits of the shorter period of time is | | | | over again. |
| you'll be able to analyse how well you're doing overall | | | | |