Fundamental Analysis: A method used to evaluate the value of a security, by which an investor would carefully examine the company's financial and operations, particularly sales, earnings, growth potential, assets, debt, management, products, and competition figures. Fundamental analysis considers variables that are directly related to the company itself, whereas technical analysis considers the overall state of the market.
Technical Analysis: A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future market trends. Technical analysts believe that they can accurately predict the future price of a stock by looking at its historical prices and other trading variables. Technical analysis assumes that market psychology influences trading in a way that enables predicting when a stock will rise or fall. For that reason, many technical analysts are also market timers, who believe that technical analysis can be applied just as easily to the market as a whole as to an individual stock. Unlike fundamental analysis, the intrinsic value of the security is not considered.
Volatility: The relative rate at which the price of a security moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of a stock moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.
Risk Tolerance: An investor's ability to handle declines in the value of his/her portfolio.