A chartist is a trader that analyses a market’s price history to determine future price trends. A chartist will use a range of analytical tools, as well as indicators, to conduct technical analysis on a market’s price chart.
Chartists look for patterns in a market’s price behaviour. By identifying these patterns, chartists can then try to predict future price movement and make trades to capitalise on them. For example, they might try to identify a trend as it forms, then profit from the resulting move.
A chartist’s trading strategy relies heavily, but not always exclusively, on technical analysis. Sometimes, a chartist can incorporate fundamental analysis along with technical analysis into their trading strategy.
Chartists vs fundamental analysts
The difference between a chartist and a fundamental analyst is that a chartist will look at the history of a market’s price to influence their trading decisions. Fundamental analysts, on the other hand, will attempt to by evaluating a number of factors, including overall economic strength and specific industry conditions.
Let’s say you’re trading Amazon. As a chartist, you might use tools and indicators to try to work out how Amazon’s price will move. As a fundamental analyst, you would look at several factors, such as company management, earnings, future projections, industry performance and company assets to try to determine whether Amazon’s current market price is a true representation of its value.
If you see a discrepancy between Amazon’s stock price and its intrinsic value, you will exploit this imbalance and trade to take advantage of its current stock price.