Traders and merchants have for centuries used a seasonal approach to advantage in markets directly affected by such cycles. Those who prospered most anticipated best. Already realizing that price responds to supply and demand, they reasoned a step further: If cycles in nature create patterns in supply and demand, then perhaps those patterns generate price patterns. If so, the market's own natural rhythm can help one anticipate recurring price movements in the future.
Thus, the seasonal approach to markets is designed to help traders anticipate the timing and direction of future price movement. If one can find out how price tends to move at a given time of year, then one can prepare well in advance to take advantage of it doing so again in the future. Armed with knowledge of history, a trader can also better understand current market activity --- and act upon it rather just react to it.
Consider gasoline. Does the annual cycle of hot weather to cold and back to hot again affect supply and demand for it? When is consumption least and when is it greatest?... To read more on Natural Market Rhythms go to http://www.mrci.com/web/trading-articles/got-gas.html
0 comments:
Post a Comment