Should you choose Fundamental Analysis or Technical Analysis?

Generally speaking, the time horizon is the factor that guides whether technical or fundamental analysis makes sense. It is generally believed that short-term investors follow technical while long-term investors are better to follow fundamentals.

Being open to combining styles may provide the best opportunity to make the most of the market opportunities. Fundamental analysis can be used to identify appropriate targets, while technicals can be followed to make the trading decisions. Together, these methods can generate a junction providing a better investment opportunity than either used alone.

No matter which approach you take, it’s always important to do your research. You have to read books, attend webinars and consult with a SEBI registered investment advisor before risking money in the market. Successful investors have an extremely systematic approach to the markets. They use specific strategies that have been researched upon and deliver time-tested results.

Small and ordinary investors need to take care of one more aspect – that investing in mutual funds is better than investing in individual stocks, at least to begin with. The rationale behind this is quite simple – buying a single stock is a lot riskier than buying a mutual fund. By nature, mutual fund invests in a larger pool of stocks which are carefully selected by a qualified and professional fund manager. This minimises the risk of stocks losing the value at the same time. Once you become conversant with markets, you may proceed towards investing in select stocks, and later even may like to participate in derivative markets.

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A.Sulthan, Ph.D.,
Author and Assistant Professor in Finance, Ardent fan of Arsenal FC. Always believe "The only good is knowledge and the only evil is ignorance - Socrates"
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