What Type of Investor are You?

There are two types of investors on Wall Street… those who follow fundamentals of a company and those who follow technical analysis of a stock.

At Monument Traders Alliance, we give you the best of all worlds – technical and fundamental – because we believe that every investor is different in their approach.

In this two-part article, we will explore both, with a more in-depth look at various technical analysis methods tomorrow.

Technical analysis and fundamental analysis are two primary methods used to evaluate and make investment decisions in financial markets. Here are the key differences between the two…

Technical Analysis

1. Focus: Technical analysis focuses on historical price data and trading volume to predict future price movements.
2. Tools and Techniques: Utilizes charts, technical indicators (e.g., moving averages, relative strength index, MACD), and patterns (e.g., head and shoulders, flags, triangles). You’ll see this style from our Lead Technical Tactician Nate Bear in Daily Profits Live and Profit Surge Trader.
3. Time Horizon: Often used for short-term trading. Technical analysts might focus on daily, hourly, or even minute-by-minute price movements.
4. Data: Relies solely on market data, such as price and volume.
5. Underlying Assumption: Prices move in trends, and history tends to repeat itself. Market psychology and patterns can provide insights into future price movements.
6. Application: Useful for identifying entry and exit points for trades. Common among traders and those who seek to profit from short-term market movements.

Fundamental Analysis

1. Focus: Fundamental analysis evaluates a security’s intrinsic value by examining related economic, financial, and other qualitative and quantitative factors.
2. Tools and Techniques: Analyzes financial statements (income statements, balance sheets, cash flow statements), economic indicators, industry conditions, and management quality.
3. Time Horizon: Typically used for long-term investing. Fundamental analysts focus on the underlying value of an asset, which may take time to be reflected in its price.
4. Data: Uses a variety of data sources, including company reports, earnings, economic data, and industry analyses.
5. Underlying Assumption: The market will eventually reflect a security’s true value. Prices can diverge from intrinsic value in the short term but will align over the long term.
6. Application: Useful for making long-term investment decisions. Common among investors who seek to buy undervalued securities and hold them until their market price reflects their intrinsic value.

Summary

Technical Analysis: Focuses on price and volume data, using charts and indicators to predict short-term market movements.

Fundamental Analysis: Focuses on evaluating intrinsic value through financial and economic data, suitable for long-term investment decisions.

Both technical analysis and fundamental analysis have their strengths and weaknesses, and many investors and traders use a combination of both to make more informed decisions.

YOUR ACTION PLAN

I focus primarily on fundamental analysis in The War Room and Catalyst Cash-Outs, which allows me to get positioned on long term trades for potential profits. To give you a recent example of one of my long-term trades, last week I closed a 30.11% return on Draftkings (DKNG) in 66 trading days.

Click here to join The War Room and start following along with these fundamental trades in real time.