Technical or Fundamental Analysis (Forecasting) – part 2

In part one of this article, I noticed some advantages of technical analysis and emphasized that technical analysis is superior to fundamental analysis. At the end of this article, I've put the link to part one.

The goal of this article is to explain that you can increase your returns and gains with some knowledge about Fundamental Analysis.

Why Fundamental Analysis is needed?

One of defects in Technical Analysis is that it's a little slow.

It means that the increasing trend of a stock started before, but after some tardiness (maybe after some days) signals of purchase appear in Technical Analysis method. Or for example on the ground of news that company publishes, you could distinguish decreasing trend of stock is starting (with Fundamental Analysis) but decreasing trend's signals appear with some tardiness in Technical Analysis.

In Technical Analysis, with notice to the past of stock you could forecast its future.

Suppose that a new company who enter in the stock market, There is no past to help us to forecast its future, so you should get helps from Fundamental Analysis.

Sometimes, you find a stock in the stock market that it's good to buy with Technical Factors but when you analyze it with Fundamental Factors you find that the price of this stock is too far from its real value and its price is increased like a bubble and maybe there are some manipulations in the stock.

Conclusion

Combination of these two methods could give you too much advantage and you could increase the return in the stock market. In fact, it's better to know both methods and then choose one of theme as a principal method and use other method as a help.

But you should notice that analyze of a stock with Fundamental method takes too much time. Remember that you use this method to complete Technical Analysis, so continue your researches in Fundamental Analysis until your researches in Technical Analysis complete. In other words: Find a stock technically and then be sure that there is no problem fundamentally.

Read part 1: Why Technical Analysis is Superior to Fundamental Analysis