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This thread was started in response to the Analytic:
US Dollar Index 14-Year Chart
Daily chart of 14 years of cyclical developments in finance & politics
but as you said, you can still trade using economics for longer term trends and thats why i think the US dollar index will run a bull and at worst stagnate
Ashraf
longer term trends can be associated to economic changes. traders just react to changes in market conditions and speculate
academics are normally risk adverse so they wouldnt trade.
i find it hard to discount the use of economics for LONGER term trends.
traders are traders and making enough money which is keeping banks alive too. but i think technical analysis is better for shorter trend 4casts. one cant use economic theory for day trades.
i note that you (and me) were almost sure of a 2 month cycle in equities and thats why we had a poll of how low we thought cable would reach in q2. we were soon to realise that we were in a massive equities bull dollar bear for q2 that shocked us all. had we looked at it fundamentally, we could used economic theory to justify a faster decline in the dollar but we didnt. so traders do misjudge but on average do well.
i am learning technical analysis but will use it with basic economics and fundamentals.
Ashraf
there are masses of dollar bears out there.
there was masses of oil bulls just prior to its collapse when i was predicting a sharp reversal.
i tend to look at markets (for longer term 4casts) in an economic way which seems to work. obviously short term the technical aspect is more likely to work.
we were taught that technical analysis is rubbish at Cass Business School during my MSc finance course so im really quite new to all this anyway and learning trader reactions, concepts and relationships. its all quite fun!