Technical analysis and fundamental analysis are the two main streams in the financial markets. Technical analysis looks at the price movement of a security in past history and uses this data to predict its future price movements. Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals.
At the most basic level, a technical analyst approaches a security from the charts, while a fundamental analyst starts with the financial statements by looking at the balance sheet for Profit, Debt etc, a fundamental analyst tries to determine a company's value. Technical traders, on the other hand, believe there is no reason to analyze a company's fundamentals because these are all accounted for in the stock's price. Technicians believe that all the information they need about a stock can be found in its charts.
Fundamental analysis takes a relatively long-term approach to analyzing the market compared to technical analysis. While technical analysis can be used on a timeframe of weeks, days or even minutes, fundamental analysis often looks at data over a number of years.
Not only is technical analysis more short term in nature that fundamental analysis, but the goals of a purchase (or sale) of a stock are usually different for each approach. In general, technical analysis is used for trading purpose, whereas fundamental analysis is used to make a long term investment. Investors buy assets they believe can increase in value, while traders buy assets they believe they can sell to somebody else at a greater price
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