There are generally two schools of thought in the investment world.
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There are two schools of thought when analyzing equity commodity or index options. They're called either fundamental analysis or technical analysis. People who side with the fundamentals look at the inner workings of a company, its financial statements, its board of directors, and overall industry or sector trends. When it comes to commodities this translates to the analysis of real demand for the commodity, weather conditions, growers profits and other economic conditions. When it comes to technical analysis, traders who rely on it generally ignore most of the above. All they are interested in is past history and statistical representation on graphs or charts. By looking at these charts and analyzing them, they can use their past experience with these types of charts and predict a trend line of where that stock or equity is going to end up. The truth of how these rather diametric beliefs compared to each other is that they have continually worked and will go on to work for those investors who excel at making use of that data. The point is it's never been affirmed scientifically that one is greater than the other. Even as somebody wanting to learn options trading this is vital information too. For instance one of the most notorious capitalists of all time Warren Buffet totally relies on fundamentals. He undoubtedly wouldn't know what chart implied if it was drawn on his palm. Then again, when I was working on the stock exchange trading desk many technical speculators had their charting software each and every day tracking price points from the previous trading day. They wouldn't be able to figure out a financial statement and most likely wouldn't even be able to recognize one. But allow me to tell you those investors profited regularly enough to work on the NYSE for 25 even 30 years and earned very a lot of money. Of course there are also those traders that take in a combination of both fundamental and technical analysis. Oftentimes brokerage firms will compare reports from both types of research analysts and then make their decision using both point of views.