Day trading strategies: the complete guide with all the advanced tactics for stock and options trading strategies. Find here the tools you will need to invest in the forex market
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What Is Fundamental Analysis?
Fundamental analysis of the commodity markets involves the study of the interaction between supply and demand; with this analysis, traders attempt to predict future price movement. Specifically, the entire concept of fundamental analysis is built upon the following equations: Demand > Supply = Higher prices Supply > Demand = Low prices Most analysts agree that commodity market supply and demand figures are quantifiable, yet even the diehard fundamentalists will admit accurate statistics are not available in real time. Thus, any numbers plugged into the simple and neat formulas given are relatively meaningless. If you input garbage data into the formula, the result will also be garbage. Accordingly, when an analyst runs the numbers she is almost certainly working with either outdated or inaccurate data. Fundamental analysts waiting for confirmed government supply and demand data will be calculating months after the fact. Alternatively, if they are calculating based on estimates (whether they are government or personally derived), it is nothing more than a guess. Most recall the simple supply and demand cross charts taught in high school and college economic courses; unfortunately, this academic practice erroneously simplifies a concept that is actually highly complex. In my opinion, what appears to be the most straightforward form of commodity market analysis—fundamental—is actually the most difficult in practice. Because of the massive complexity that comes with estimating current supply and demand details of any given commodity, the seemingly simple mathematical equation fundamentalists use to speculate on prices can be confusing at best, but misleading at worst. In addition, regardless of the time dedicated to deciphering the market’s fundamental code, it can be extremely problematic for a trader to succeed using this method of analysis alone. In order to understand the place of the commodity markets, one needs to consider the bigger picture. Asset classes are certainly not limited to these five groups, but these are the most common categories. Obviously, any classification is rather arbitrary or, at least, subjective. Even wine or art can be seen as specific asset classes, as much as volatility or weather. On the basis of any assets, including the latter, derivatives or structured products can be developed and traded. Download 1.65 Mb. Do'stlaringiz bilan baham: |
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