How to Predict Market
“You must realize that a single theory (or even theories) is not able to explain the working of the market that has got a large number of mutually interacting variables. ”
Whenever you invest in the market, your hard earned money is at stake. It is very unlikely that you invest just offhand like and don’t weigh the possible ups and downs of your investments. When a huge amount of money is involved you got to be termed as a very sensible investor.Then why do sensible investors go wrong? Can’t we say that the market has a mind of its own and so can generate bubbles or other types of anomalies?
All the more, there are some investors who fall prey to these bubbles and anomalies and invest their money in the market when there is either heavy buying or heavy selling. This is their method to tackle the market.
Then come the small-time investors. These investors don’t have thorough knowledge of the market and hence participate in the market by way of clued-up conjectures, their gut feeling or at someone’s recommendation.
No doubt, as discussed above, investors are of different types but one thing is certain that they are chasing the same dream of lofty profit. But almost each type of investor gets cheated by the market off and on.
People take resort to economic theories to explain the eccentricities of market. They forget that theories are made of certain variables and the results are that are deduced are also based upon these variables. In actual life there may be far more variables than can be adjusted into equations and formulae.
These variables may also give feedback to one another. Such a situation in theory leads to non-linear equations that are extremely hard to solve. When the case of feedback from 3 or more variables is taken into account simultaneously, the equations become impossible to solve.
So, no matter what happens, you should consider the market right. You must realize that a single theory (or even theories) is not able to explain the working of the market that has got a large number of mutually interacting variables.
Delve deep into the charts. Convince yourself that you have to trade the market and not any kind of fabulous theory. Markets often tend to meander in a direction that is seldom predicted by economic theories.
Thus, don’t go in for long-term goals but try to fathom the course of the immediate ones. You should be more concerned about the functioning of the market in the next half an hour rather than mull over its state of affairs in the next month. It’s much easier and accurate this way.
Author - DeeKay
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