Fundamental and Technical Analysis Tools in Online Trading

Fundamental analysis is one of the main tools in the world of online trading. This type of analysis focuses on examining economic factors and fundamental indicators that affect the value of financial assets. For example, unemployment rates and Gross Domestic Product (GDP) can be major influencing factors. Practically speaking, if a company is expanding its operations in a thriving market, investors might expect its stock value to rise.

Example: In 2020, the COVID-19 pandemic impacted various sectors, leading to a sharp decline in stock markets. In this context, pharmaceutical companies developed vaccines to combat the pandemic, resulting in a surge in their stock values.

Technical analysis focuses on studying price movements and historical data to predict future trends. It involves using technical indicators and candlestick patterns to identify entry and exit points. For instance, the moving average is used to determine market direction over long or short time frames.

Example: During the significant rise of the cryptocurrency market in 2017, traders used technical analysis to identify high and low points. They observed the formation of a "head and shoulders" pattern on the charts, which helped predict a trend reversal.

Technical indicators are common tools in technical analysis. These include indicators like RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence), which measure market momentum and direction. This type of analysis is used to provide signals about potential changes in market direction.

Example: When using the RSI indicator, if the value is above 70, the market is considered overbought and may reverse direction. Conversely, if the value is below 30, there might be a potential for another rise.

Fundamental and technical analysis tools are used in online trading to enable traders to make informed decisions. Fundamental analysis combines economic factors and financial indicators, while technical analysis focuses on asset price analysis. By using these tools simultaneously, traders can enhance their strategies and make more informed decisions regarding market movements.