When Investing or Trading the Stock Market, there are two methods of analysis an investor may use to base their decision making process on.

Fundamental Analysis and Technical Analysis.

When an investor studies the financial and management details of any particular company, we call this Fundamental Analysis.

Many investors believe that by looking at the company's profits and expenditure history, as well as it's level of debt and strength of management, they can make an estimate of the value of that company's stock price, as well as how it may perform in the future.

They form a view as to whether the company will remain profitable for the future and if it can offer solid ground for investment. This type of analysis is most useful when buying shares as a long term investment.

When an investor studies the share price history of a particular stock using a stock chart and various graphing tools and indicators, we call this Technical Analysis.

Technical analysts take a completely different approach to that of a fundamental analyst. They don't care at all about the "value" of the company because they are only interested in the price movements in the market.

Using technical analysis software and different tools such as trend lines & support and resistance, they are able to study the supply and demand of a stock to determine which direction or trend might continue in the future.

In simple terms, technical analysis studies the prices and volume of a stock in an attempt to understand the emotions in the market itself, rather than the components that make up the market.