Join        Login             Stock Quote
Top News :  

Using Fundamental and Technical Analyses to Predict Prices
By: Rick Thachuk   Thursday, August 9, 2007 12:14 AM
Using fundamental analysis to predict futures prices has that precept as its foundation, and attempts to identify the "causing" factors. In this sense, the approach is intuitively appealing.

o Objectivity:
Fundamental analysis is objective in that relationships are tested by sound mathematical and statistical methods. Those that fail are discarded, while those that pass are perceived as being credible. There is no room for personal predilection or bias. The reliance on objectivity is desired by many traders who hold little confidence in their ability to predict prices purely by discretion.

o Available Resources:
Attempting to predict variables through fundamental analysis is not exclusive to the futures trader. Companies attempt to predict sales, governments attempt to predict unemployment and meteorologists attempt to predict the weather. With all of these industries attempting to harness the power of fundamental analysis, one benefit is a refinement and improvement in the pool of fundamental analytic techniques available. For instance, if a good technique is developed to predict the weather, it can be applied to futures prices and, hopefully, yield satisfactory results as well. This is exactly how Chaos Theory, a particular type of fundamental analysis, moved into the realm of the futures trader.

commodity futures broker, futures trader, commodities futures trading, financial and commodity futures markets, paper trading, full service broker assisted accounts.

Disadvantages of Fundamental Analysis:

o Data Intensive:
Fundamental analysis relies on a considerable amount of data to test the significance of variables. Such data are often not easy to acquire and, moreover, are seldom available without charge. As well, data are often contaminated with reporting errors which must first be identified and corrected.

o Labor Intensive:
Fundamental analysis also requires a considerable amount of human labor - time and energy. As well, methods have become so complex that few individuals short of a trained economist can properly apply the available technology. As an example, large banks often employ teams of economists for formulating their in-house prediction models.

Related Stories

  • No Stories Found

Comments Closed


Related Press Releases
Popular Articles
Recent Articles by Rick Thachuk

Subscribe to Email Alerts rss feed or RSS feeds rss feed for articles from more than 800 contributors and press releases, SEC filings and full text news from thousands of sources.

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.