Technical and fundamental analysis
Typically, shorter-term traders use technical analysis and longer-term investors use fundamentals analysis, but often investors and traders use a blend of both.
What is technical analysis?
Technical analysis uses chart and price data for all decisions based on the theory that price is everything and, in the short-term, fundamentals do not matter.
This is certainly correct, in that the short-term fundamentals are often out of kilter with share prices because other events drive share prices. The view is that, over the longer term, the price will reflect a company’s fundamental value.
What is fundamental analysis?
Fundamentals include data such as a company's earnings, various margin levels, competition in the industry in which the company operates and even currency moves, if the company operates across borders. To arrive at a fair value, fundamental analysis uses all this data and various valuation methods.