Very often we heard traders/investors mentioned about these two terms: FA and TA, which stand for Fundamental Analysis and Technical Analysis respectively. These analysis have opposite viewpoint on the topic of market efficiency.
For me, the starting point for new traders/investors should be fundamental analysis. A correct analysis of the factors influencing supply and demand helps establish the overall trend in a market. However, these factors may take a long time to exert their influence, so we should also use the technical analysis to help forecast future price action.
Technical analysis is a huge discipline and needs some efforts to excel it. A basic understanding on support/resistance, moving average, MACD, RSI and candlesticks patterns will give you brief idea the price action of a share, which improve the chances of profit. Technical analysis can be used to establish both the entry and exit levels for a trade, whether setting a limit to take a profit or choosing a stop to cut a loss.
An understanding of technical analysis is definitely a requirement for a trader, which often buy in at support and sell their holding when it reaches resistance price level. Without establishing this understanding, rushing into the market and make a purchase is simply considered as gambling in the stock market.
In contrary, the medium/long term investor might think understanding of technical analysis is no necessary, as they will just buy and hold for some period of time, current price action is not in their interest. The technical analysis will help to increase the chances of investment success; Without that, you might buy in at resistance level, and incur huge paper loss after that.
Lastly, as this analysis is based on the historical price level, it could not foresee any certain unexpected events. Besides that, based on same historical price action, different people will deduce different conclusion, so technical analysis is much like of an art appreciation rather than a scientific analysis.
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