Though there is some binding, we need to be at ease with each other. This terminology is evergreen all through this sector. Though there are vast variations in the approach, it is quite safe that most outsized financial institutions now employ both methods. Do remember that both have their own weaknesses and strengths.

The Trading Approach
A fundamental trader strongly believes that a share’s best performance is purely based on the fundamentals of the company like PE ratio, balance sheets, and profit/loss, ratios and business predictions. The technical trader believes that the future performance depends on simple information, namely the instrument price chart which encapsulates the company’s entire information.

A concept to be understood is that a technical trader will mainly be studying charts. Use fundamental analysis to define the business economy and therefore which industries offer the best growth future. This information is used to identify groups of target stocks. This finally uses technical analysis of the price charts to follow trends and select prospects.

Charts – Analysis and its components

Technical online trading is primarily about the study and analysis of charts. All charts are from share scope parcel. The various components of the chart are explained. The left and right hand side show the price of the share in pence. Along the bottom is the timescale. The chart itself has two colored bars, yellow and red called the candlesticks that represent the daily movement of the price of the share. It also shows the opening and closing price on the day. At the bottom of the chart is one of the most important pieces of information that you will use in your analysis, and this is volume. The numbers up the left and right hand side are the scale in millions, and indicate the number of shares traded on the market during the day. They are displayed as bars so that they are easy to read. You can instantly see where the volume is high, low or just average.