What is the difference between investment and trading?
There are two different variables that define them.
Fundamental analysis and technical analysis.
Fundamental analysis often looks into the profit margins and the nature of the business of the company. The price-to-earnings ratio (P/E) or earnings per share (EPS) are two such commonly used tools for fundamental analysis.
Which can be obtained from the income statements given by the company or easily calculated with the use of the formulas which can be simply obtained from the internet. Fundamentally, we are looking at the price of the stock of the company whether it is undervalued, overvalued or at par. We are "supposed" to choose undervalued stocks and invest in them but in the real market, it is always overvalued due to speculation of the future prospects of each company. When there is a market crash, it will be a good time to spot for undervalued stocks.
Technical analysis is use of technical tools such as candlesticks patterns, indicators, chart formations and harmonic patterns - technical analysis techniques are everywhere and they work one way or another. Technical tools usually look at the repeating observed patterns from historical prices and with some logical explanation behind it. We do not care about the fundamentals of the company when using technical analysis but we do look at the news or data which might affect the fundamentals and causing a quick movement in the prices.
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