Today I've asked Tony from TheGrainTrader.com to talk a little about Fundamental VS Technical Analysis when it comes to the grains...and trader in general! Enjoy!
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I have always been a faithful user of technical analysis as my choice of ways to predict market direction, and I have had much better success with it as compared to what I have had with fundamental analysis.
Technical analysis lets me use a price chart to compare the past and present markets to find profitable trends and patterns, which brings me to one exception that I do use at times.
Although I don’t put much faith in crop reports, hard freezes, or droughts, I have had some use for seasonal patterns in the grain markets, and I like them, because I can identify them on a price chart.
Now, a tendency is just that, a tendency. Not all seasonal patterns are consistent enough to trade on, so you have to be careful to only use them as a guide and not as a fact. You must verify them with technical analysis before you actually make a trade. Don’t make a trade based solely on the seasonal tendency, or you probably won’t have much success!
Seasonal data can be found many places, but the best tendencies to use are the ones you can validate for yourself, on a chart. One of the best tendencies, I have identified, is for Oat futures to bottom around July and August, and then rise into December. (That’s just a little tip!)
Just remember to verify seasonal patterns with technical analysis, and always keep your stops placed! Good luck with your trading.
Tony Lorenzo
I belong to an investment group and we trade options using technical analysis and the help of marketclub. I personally use the marketclub trading service every night to help me find stock candidates for next day's trading. The picklist of stocks for our trading group can be found at:
http://www.optionsoutlet.org/
Technical analysis is much quicker and allows you to make faster trading decisions. Technicals will follow the fundamentals anyway.
Good advice this year. This is a very different and unique trading environment. More lessons to learn I guess!
am specialise in using technical analysis,which i prefer it to fundarmental.
though am proficent in fundermental but it is too deadly for my liking.so i voted to technical trading
Seasonal patterns are very important first step when identifying a long term technical setup. I agtee that a trader cannot rely solely on a seasonal pattern no matter how long historical much reinforces the tendency.
Best Trades
Where can I find a good source regarding seasonal tendancies in the markets?
Gold and silver tend to bottom in August as well. http://www.usagold.com/analysis/doldrums-2008.html