FOURCAST can do for you.
Then, expand your ideas: utilize more data, electronic stock market,
commodity, options, economic and other financial data bases, a user's
monograph + educational magazine article, case based & research
journal references, and much much more!
You can receive immediate rewards, while developing a long term strategy
for personal financial independence.
Financial data may be imported from yahoo.com, cnbc.com and http://moneycentral.msn.com/investor/home.asp. in the following date formats: month/day/year, month year, month-year, day-month-year.
Scroll down to: Test Your FOURCAST financial IQ. >>>>
Forecasting has many applications. How the forecast is applied,
depends very much on the particular application. The following
information is intended as a guide to stock market applications.
The forecast may be for a stock price (where the trading instrument may
the stock), or an index of stock prices (where the trading instrument
may be the index option). Forecasting accuracy will be greater for stocks
which are heavily traded, and greatest for indices. For this reason, the
following will focus on index forecasting. However, the main objective of this
information, and the test that follows is a critical examination of the
the way in which we view this application, and in general, the role of
forecasting turning points and changes in trend.
Summary of suggested Trading Rules for
Index Options
(Example: OEX,SPX,NYA,XMI,XAM)
ASSUMPTION: Any change in interest rates is due purely to changes in
market conditions, and not to regulatory intervention. An increase in
interest rates due to regulatory intervention will cause price indices
to fall. A decrease in interest rates due to regulatory intervention
will cause price indices to rise. Since there is no way to know in
advance, if either of these will occur, it may not be possible to
forecast their outcomes.
Scroll down to: Test Your FOURCAST financial IQ. >>>>
1. Examine the forecast for a rise or fall:
a) which is sustained over a 20 day period.
b) which is significantly greater than unexplainable random error.
Three threshold values may be contemplated:
(i) (+/-) 3% mildly bullish/bearish
(ii) (+/-) 6% bullish/bearish
(iii) (+/-) 10% very bullish/bearish
2. Having established the direction of the systematic trend,
3. Take up a corresponding position in the index option market. Options should be purchased:
a) in the money
b) with a long time remaining before expiration
c) when the speculative premium is low, noting that
(i) a high speculative premium on call options can be bearish
(ii) a low speculative premium on call options can be bullish
4. Set a realistic profit goal (based on approximately half the forecast change):
a) If the price of the option rises sharply, use a tight stop loss, to
protect against sudden correction of what may have been due to the random
unsystematic part of the price movements.
b) If the price of the option falls initially, buy more at the new
cheaper rate. Bottom fishing in this way is designed to offset the
inability to predict the unsystematic part of price movements. Price
volatility tends to increase at the market tops and bottoms. Profits can
only be generated by buying low (weak market) and selling high (strong
market).
c) There will be a difference between the forecast time for when a
rise or fall is to begin, and when it actually begins. The inability to
predict the exact time is due to the unsystematic part of the price
movement. In order to absorb the variability in the time difference,
observe that:
Once a bullish signal is given, that signal remains in effect until a
bearish signal is given.
Once a bearish signal is given, it remains in
effect until a bullish signal is given.
Scroll down to: Test Your FOURCAST financial IQ. >>>>
Then, expand your ideas: utilize more data, electronic stock market,
commodity, options, economic and other financial data bases, a user's
monograph + educational magazine article, case based & research
journal references, and much much more!
You can receive immediate rewards, while developing a long term strategy
for personal financial independence.
Test your FOURCAST financial IQ.
Instructions
This review is designed to determine how well you understand what FOURCAST
does, and how to put it to work for you. When you are satisfied that you
have answered the questions correctly, you are ready to use the program. Please feel
free to use this self-evaluation test as often as you like
(In order to receive anonymous feedback, click on the score button at the end of the test.)
Questions
Answer each of the following multiple choice review questions by
selecting the response which is most immediately appropriate.
Then, expand your ideas: utilize more data, electronic stock market,
commodity, options, economic and other financial data bases, a user's
monograph + educational magazine article, case based & research
journal references, and much much more!
You can receive immediate rewards, while developing a long term strategy
for personal financial independence.
FOURCAST Home Page
http://www.fourcast.net
Engineering Management Consultants assumes no responsibility for the results related to using any of the links list below: