logo
  Join        Login             Stock Quote

Using Fundamental and Technical Analyses to Predict Prices

 August 09, 2007 12:14 AM


When trading futures and options, money is made by buying low and selling high, or vice-versa. If you could predict prices perfectly, then making money in futures and options would be terribly easy. Unfortunately, predicting futures prices has proven to be anything but easy. While most futures traders admit that it is impossible to predict prices perfectly, most nevertheless believe that they can improve their chances beyond a "pure guess". How they go about this differs from trader to trader. Some use fundamental analysis, others rely on technical considerations, while still others base their trading on gut instinct or seemingly totally unrelated events such as celestial movements. By far, the most commonly used methods of price prediction can be grouped into either fundamental analysis or technical analysis. The general features of these two techniques are described below. You can find industry-leading textbooks containing more specific and detailed information in our bookstore.commodity futures broker, futures trader, commodities futures trading, financial and commodity futures markets, paper trading, full service broker assisted accounts.
Fundamental Analysis
Fundamental analysis attempts to predict futures prices by determining the factors or variables that effect the futures price, and then monitoring these variables for change - as they change, you can predict the resulting change in the futures price. For instance, the fundamental determinants of a Deutschemark futures price may be the level of short-term interest rates in the United States relative to those in Germany, the rate of inflation in the United States relative to that in Germany, net merchandise trade flows between the two countries, and the outstanding relative supplies of money. Determining exactly how each of these variables effects the futures price is done through regression analysis which borrows heavily on economics and statistics. Theoretically, once the relationship is identified, you are able to predict the movement of the futures price resulting from, say, a decrease in German interest rates, and then establish the appropriate futures position.
commodity futures broker, futures trader, commodities futures trading, financial and commodity futures markets, paper trading, full service broker assisted accounts.

[Related -ETF Performance Review: Major Asset Classes | 19 Dec 2014]

[Related -Chart Says This Retailer's Comeback Isn't Finished]

Advantages of Fundamental Analysis:

o Intuitive Appeal:
Most of us accept the precept that one thing causes another.


Next Page >>123


The Wisdom of Paper Trading Trading Tips for Beginners
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageChart Says This Retailer's Comeback Isn't Finished

One of the surprises, at least on the surface, of the market's recent swoon was the outperformance of read on...

article imageETF Performance Review: Major Asset Classes | 19 Dec 2014

It’s all about real estate investment trusts (REITs) these days when it comes to bullish performance among read on...

article imageOil and Global Stock Markets Rebounding Sharply

So far so good on our expectation of a 4 to 5% pullback and then a resumption of the bull read on...

article imageGrading the FOMC

Love its members or loathe them, you have to admire the gradual impact the policy-making committee has had read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.