There is an obvious division in trading styles.  Much like political parties, traders often come from various schools of thought about the core of investing.  Some investors look for the best and most profitable companies; claiming that profitable businesses always see higher stock prices.  The other school of thought believes that profitability is irrelevant and that the stock price is not the best indicator of financial success.

Fundamental analysis is the most basic of the ways to study investments.  Fundamental analysis looks at a company’s bottomline, how much they make and how fast the company is growing.  Famous fundamental investors include Benjamin Graham and Warren Buffett who have each made their fortunes buying solid businesses for the long term.  Fundamental investment neglects the price of the stock in favor of the financial wellbeing of the company.  Fundamentals are most often employed on long term trades to pick profitable businesses for the long run.

Technical analysis is the study of price points and at what price the market starts buying or selling.  Unlike fundamental analysis, the technical analysts believe that the price of stock moves independently of how well the company is doing.  Technical studies place more emphasis on the market than the businesses that are being traded.

There is reason behind both schools of thought.  Fundamentalists buy into strong companies with good outlook.  When businesses do well, the value of the business rises over long periods of time.  Technical analysis assumes that the market is only willing to pay so much or so little for a business and that the price of a corporation is set by the market rather than its earnings.

The decision is up to you.  Both strategies are profitable and have some merit.  Fundamental analysis is more often associated with long term investments while technical analysis is usually attached to short term trading.