Thursday, April 5, 2012

Summary of Findings (Green Team): Economic Trend Analysis (3.75 out of 5 Stars)

Note: This post represents the synthesis of the thoughts, procedures and experiences of others as represented in the 12 articles read in advance (see previous posts) and the discussion among the students and instructor during the Advanced Analytic Techniques class at Mercyhurst University in April 2012 regarding Economic Trend Analysis specifically. This technique was evaluated based on its overall validity, simplicity, flexibility, its ability to effectively use unstructured data and its ease of communication to a decision maker.

Description:
Economic trend analysis is a methodology useful in determining trends by statistically analyzing data. The technique is very reliable up to a certain point, but has limitations based on availability of data, understanding of the topic and technique and each problems’ predictive horizon. The method’s flexibility and usefulness is incumbent upon sufficient actionable data. Given adequate, structured, information and analysis, economic trend analysis can easily communicate complex trends and forecasts to decision makers. The method is most useful for competitive and national intelligence.

Strengths:
  • Allows analysis to extrapolate based on available data
  • Can be used for future forecasting or estimation by monitoring indicators and its drivers
  • Can be applied to social issues such as sustainability, eco-tech, public spending and health indicators.
  • Utilizes big data to extract trends from overwhelming amounts of information
  • Able to use both qualitative and quantitative data sources

Weaknesses:
  • Limited by the quality of available data
  • Need to understand differences in definitions
  • Can be time consuming
  • Outcomes can be hard to interpret (especially with bigger data sets)

How-to:
  • Pick a problem or issue to examine
  • Decide on specific qualitative and/or quantitative data needed for analysis
  • Obtain relevant data
  • Input data into an analytic tool such as Excel or STATA
  • Configure and analyze results of data using charts, graphs, etc.
  • Use forecasting tools within Excel or STATA to gain further insight

Personal Application of Technique:
The class was divided into groups of two and assigned a country.  The class identified values for various economic variables for the years 2006 to 2010.  After compiling the data the teams made a conclusion on the economic well being of the country and determine if that would affect the stability of the country in the future.  Each team provided an analytic confidence based upon the believability of the data.

Each country had different issues with finding data to enter into a uniform database such as availability of data, as well as reliability of data reported to international statistical sources.

Rating: 3.75 out of 5

2 comments:

  1. Let me explain the basic principle how most Forex systems work. They are tuned up to work in a specific market condition. They often make money in a trending market, but loose money in a choppy market. It is not a problem as long as the market is trending and the system is making more money than it loses. Such a system can be profitable for several months and you would be happy with it. BUT...

    PREPARE FOR THE WORST...

    Market change over time. A well designed system starts with trend analysis to stay away from potentially losing trades. There are two problems of how a Forex system recognizes the trend.

    PROBLEM: FALSE "STRONG TREND" INDICATION.

    The system responds only to immediate price action. An explosive price movement that is usually the result of news release is tempting people to jump in and make a profit. It looks like a "strong trend", but what usually happens next is a hard fall.

    To avoid falling into this trap, check for the SOLUTION to find a REAL trend:

    ==> http://www.forextrendy.com?vgcvasdiugf9g87346

    SECOND PROBLEM: TREND RELIABILITY

    Most systems use various indicators to determine the trend. Actually, there is nothing bad about using indicators. One Simply Moving Average can do the job. The problem comes with the question: "Is the market trending NOW?" Whether the market is trending or not trending is not like black and white. The correct question is: "How well the market is trending?"

    And here we have something called TREND RELIABILITY.

    Trends exist and they can be traded up and down for a profit. You have to focus only on the most reliable market trends. "Forex Trendy" is a software solution to find the BEST trending currency pairs, time frames and compute the trend reliability for each Forex chart:

    ==> http://www.forextrendy.com?vgcvasdiugf9g87346

    ReplyDelete
  2. Let me explain the basic principle how most Forex systems work. They are tuned up to work in a specific market condition. They often make money in a trending market, but loose money in a choppy market. It is not a problem as long as the market is trending and the system is making more money than it loses. Such a system can be profitable for several months and you would be happy with it. BUT...
    PREPARE FOR THE WORST...
    Market change over time. A well designed system starts with trend analysis to stay away from potentially losing trades. There are two problems of how a Forex system recognizes the trend.
    PROBLEM: FALSE "STRONG TREND" INDICATION.
    The system responds only to immediate price action. An explosive price movement that is usually the result of news release is tempting people to jump in and make a profit. It looks like a "strong trend", but what usually happens next is a hard fall.
    To avoid falling into this trap, check for the SOLUTION to find a REAL trend:
    ==> http://www.forextrendy.com?nsjjd92834
    SECOND PROBLEM: TREND RELIABILITY
    Most systems use various indicators to determine the trend. Actually, there is nothing bad about using indicators. One Simply Moving Average can do the job. The problem comes with the question: "Is the market trending NOW?" Whether the market is trending or not trending is not like black and white. The correct question is: "How well the market is trending?"
    And here we have something called TREND RELIABILITY.
    Trends exist and they can be traded up and down for a profit. You have to focus only on the most reliable market trends. "Forex Trendy" is a software solution to find the BEST trending currency pairs, time frames and compute the trend reliability for each Forex chart:
    ==> http://www.forextrendy.com?nsjjd92834

    ReplyDelete