Market forecasting – is it worth the trouble?

There are several different camps when it comes to market forecasting.

There are people who believe that forecasting markets with any accuracy is a fairy tale, a practice based on false hopes and unrealistic expectations.

Then there are those who believe that markets can be accurately predicted in advance, and share stories of old traders, such as the legendary WD Gann, as part of the proof that this can be done.

And there are those who fall somewhere in the middle, believing that market forecasting with a high degree of accuracy, although not 100% accuracy in 100% of the time, is possible and can be achieved with the right methods and techniques.

Where am I on this issue?

My belief is that from the second group mentioned above, that markets can be accurately predicted in advance with a constant clip and I like to talk about those who have demonstrated this in the past, but the PRACTICE of art and the ability to predict in accordance with the last group mentioned above, that expectations should be relaxed with a cautious approach and that other indicators and methods (MACD,% R, moving averages, pre-calculated support and resistance, etc.) should be included before trade decisions are made based on forecasting.

For three decades, I focused all my energy on forecasting future market turns. Those who have followed my work over the years are aware that my predictions are very accurate a large percentage of the time, but of course not 100% of the time.

I have found many methods and techniques that give an amazing idea of ​​what the market is likely to do in a few days or weeks, using actual calendar dates to indicate when the market is likely to reach the top or bottom. But I am also aware that there are methods and techniques that have not yet been discovered or lost over time due to those who have not revealed their discoveries and led them to their deaths.

Whether you agree or not, whether accurate market forecasting is possible, the question in this article is whether it is “worth the effort”?

In a word, the answer is … YES!

Whether you think that forecasting the effect of the market price is a prediction of a future reversal date for when the market will reach the top or bottom (for which I practice), or that of strict application of common indicators of the chart in an effort to predict a breakthrough or general change in the trend, the whole point of forecasting is to “minimize risk exposure” while “maximizing the profit potential”.

If someone is going to have a hard time with market forecasts, then obviously this person will have found techniques and methods and will prove again and again that he is very reliable for this purpose. Since we can all agree that no method or technique will be 100% accurate 100% of the time, if the forecasting tool can produce a good amount of useful information alone or in combination with other methods, this will be difficult. use.

Traders who are familiar with technical analysis are likely to be familiar with the concept of ‘divergence’, such as ‘bullish or bearish divergences’, using oscillator-type indicators. Obviously, divergences will not be used to predict on which day or week the market will make the bottom or the top. However, this is a kind of forecasting method, as it can help the trader to “predict” whether the market is about to change the trend. I personally find this analysis very useful and useful along with my other forecasting methods.

The point is that a clear understanding of “divergences” is considered “worth the effort” even for those who do not join the idea of ​​predicting market reversals as possible. Those who have never analyzed the price action for “discrepancies” will, of course, be skeptical that it has any value until they put that skepticism aside, seeing how powerful this simple method is. The same can be said for other forms of market forecasting. And that’s why it’s “worth the effort” to research and learn.

If the trader’s goal is to enter a new market move as early as possible with the least degree of risk exposure and the greatest potential for profit, then it is worth trying to learn everything you can to make this happen. Market forecasting is a practice that falls into this category.