Market time and market forecasting

Several decades ago, it was widely believed that the most effective way to analyze trading markets was to determine the basics, such as the number of stocks, current demand data, expected harvest yields, and more. Many suggest that the Technical Analysis was not useful. The reasons given were that the price action was accidental or that it ignored the main factors of the underlying asset. The facts are just the opposite.

Many have learned that the old buy-and-hold strategy can be costly. Stories abound with those who have found that the value of their portfolio has broken (or lost value) only after possession for several years. The 2008 financial crisis highlights one of several historic periods in which investors have lost millions. While it’s always a good idea to know a company’s financial health, as well as their future sales / profit potential, what may be a healthy financial statement and outlook today may look much different tomorrow.

Technical analysis focuses on price movements, predicting the price direction based on its tides (ie fluctuations, cycles, etc.). The main factors of each asset are built into the price action, as the market gives way to everything. In addition, history tends to repeat itself, and this recurring nature of price action can be predicted and taken advantage of.

Many technicians rely on a variety of metrics to help uncover some aspect of historical time use data. When one indicator can highlight some basic pattern of the cycle that could help predict the next period of trend reversal, another indicator may highlight a condition of overbought or oversold in markets, all relative to past price action.

The technical analyst relies heavily on price charts. Certain patterns are often repeated, giving the technique an advantage for a potential price break. Such models are given names, such as the “Head-and-sholders” model, the formation of a “wedge” or “flag”, etc. All these technical approaches are useful to some extent.

A precise market schedule is crucial in today’s volatile markets. Without greater accuracy over time, the trader is exposed to a higher degree of risk and can leave more profit on the table.

Let me illustrate this.

For discussion, suppose the price range of each trading day is 50 points. If your allowable risk exposure (to what extent you will allow the market to move relative to your position) is 50 points, you should enter the market exactly on the day you expect the move to start in your favor to avoid stopping at a loss . If your tolerable risk exposure is 100 points, you must be accurate in your time within +/- one day to avoid stopping at a loss. This emphasizes the importance of the accuracy of the market schedule.

Now in the real world, every day the price range varies from the next. Depending on how effective your timing approach is, you may risk less than the average point range. The less accurate your timing approach, the more you have to risk trading initially.

While the timing of the market itself can be done freely, using standard technical indicators, trend lines and moving averages, the accuracy of market time is achievable with good market forecasting methods. Market forecasting to determine market time is extremely effective because, unlike most technical indicators that are “leading” or “lagging”, a good market forecasting method can predict the market’s reversal to the exact day of change. of the trend. Providing any market forecasting method with a small deviation of +/- one day can give any trader an incredible advantage in forecasting market turnovers in order to accurately determine time and market trading.

Some traders are historical legends who used market forecasting methods to accurately determine the weather. Who hasn’t heard of William Delbert Gunn (better known as W. D. Gann)? This financial trader is known for developing several technical approaches, such as the use of Gan angles or the trend indicator. His forecasting methods include the use of the square of nine, cycle analysis and market geometry. Using market forecasting tools like these and others, he is known to have turned a small amount into a large amount quite quickly.

So there are two main points that I hope you have gathered by reading this article. Point # 1 is that in order to better manage your risk exposure and maximize your profit potential, the more accurate you need to be with your timing approach. Point 2 is that the most accurate way to determine the timing of markets is to take advantage of market forecasting techniques, where you can often determine the timing of your trades until the exact day of a new move.

There are many secrets, methods and techniques for forecasting the market that you can learn right now to improve your time in the market. Some are good, others are not so good. I have spent more than three decades training, testing and discovering market forecasting approaches. When I started, it wasn’t as available as it is today. So it has definitely noticed some growth over the years and therefore you should have no problem finding approaches that suit your trading and investment style.