When it comes to judging a stock’s potential, there are really just two schools of thought. They’re called fundamental analysis and technical analysis. And while successful traders often use both types of analysis, the most successful traders master one or the other.

In general, fundamental analysts concern themselves with a company itself. They dig into financial statements and balance sheets. They calculate assets vs. liabilities, sales vs. profits -- all the nitty-gritty details to find out what a company is really worth.

Fundamental analysis can be a great way to find stocks for your portfolio that you plan on holding for a long time. But just because a company looks great on paper doesn’t mean the stock market will agree. In the short term, anything can happen. And that’s where technical analysis can help. Therfore use fundamentals for long term investing not trading.

Technical analysts rarely worry about companies themselves. They’re more concerned with the company’s stock price. Using charts or other systems, a technical analyst tries to decide where a stock price is going next. Therefore once you have decided what companies are sound investments use technical indicators for entry signals.
This is a patience trying experience because when someone decides they want to buy something they want to buy it now. Buy after the market has put it on the bargain table even though the fundamentals are strong.