What is more important for profitable investing - technicals or fundamentals
In the world of investing, two primary approaches help investors analyze markets and securities:?fundamental analysis?and?technical analysis. But what is more important for profitable investing – technical or fundamental analysis? We share our insights.
There are two main approaches to analyze potential investments
Fundamental Analysis:
Technical Analysis:
In Summary:
Many investors blend both approaches for a more comprehensive view.?Ultimately, the choice between fundamentals and technicals depends on your investment horizon, risk tolerance, and personal preferences.
Fund managers?rely on a combination of?key performance indicators (KPIs)?and analytical tools to make informed investment decisions. Below we summarize some of the essential indicators and tools they use:
Asset Under Management (AUM) Growth:
Information Ratio:
Return on Investment (ROI):
Risk-Adjusted Returns:
Portfolio Diversification:
Expense Ratio:
Active Share:
Alpha and Beta:
Additionally, fund managers use?operational value creation strategies?to enhance returns. They focus on revenue growth, margin expansion, and operational efficiency within portfolio companies.?Monitoring key performance indicators (KPIs) directly linked to the fund’s investment thesis helps guide their decisions.
Equity traders rely on a variety of?technical indicators?to analyze price movements, identify trends, and make informed trading decisions. Below we summarize some of the key indicators commonly used by equity traders:
Relative Strength Index (RSI):
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Bollinger Bands:
Moving Averages (MA):
MACD (Moving Average Convergence Divergence):
Stochastic Oscillator:
Average True Range (ATR):
Volume Analysis:
Traders often combine multiple indicators to create a comprehensive trading strategy.?Each indicator has its strengths and limitations, so understanding their nuances is crucial for successful equity trading.
Technical indicators which proved to bring the most accurate results
The accuracy of technical indicators can vary based on factors such as market conditions, time frames, and trading strategies. However, several widely used indicators have demonstrated effectiveness. From historical analysis of returns it is very difficult to say with confidence which technical indicator is the most accurate. In our view, investor should combine several indicators. The most common of them are:
On-Balance Volume (OBV): Application: Traders use OBV to identify potential trend reversals based on volume changes.
Relative Strength Index (RSI): Application: Traders look for RSI levels above 70 (overbought) or below 30 (oversold) to make decisions.
Moving Average Convergence Divergence (MACD): Application: Bullish or bearish signals occur when these lines cross.
Stochastic Oscillator: Application: Traders watch for crossovers and extreme levels (above 80 or below 20).
Williams Percent Range (Williams %R): Application: Values below -80 indicate oversold conditions, while values above -20 indicate overbought conditions.
Investing with Artificial Intelligence
Artificial intelligence (AI)?has significantly impacted the world of investing, offering both advantages and opportunities. Currently there are several application of AI in investing:
Stock Picking with AI:
Automated Portfolio Building:
Our view
There are number of strategies that you can apply in order to make profitable investments. However, there is no one particular strategy that would bring 100% accurate results. It is also advisable not to rely completely on AI algorithms. The best approach is to use a mix of strategies and tools which are suitable for your risk-return target. Continuous learning and communication with industry experts is critical in order to achieve the best investment results.
In this way ki-wealth.com is here for you to help. For more detailed information please do not hesitate to contact us.