FORECASTS, PREDICTIONS and MARKET TIMING

Whatever the reason one has for trading in the Futures and
Commodities, Forex or the Stock markets, everyone can agree that
in order to trade profitably you must buy low and sell high, or
sell high and then buy back low. It is a simple reality that
deserves no debate.

However, although everyone knows that you must buy lower than you
sell and vice- versa, it is deciding 'where' to buy or sell that
makes this simple concept hard for many to actually do. In other
words, unless you have enough money and an endless amount of time
to just buy at the market without any thought of market direction
and just hold on until 'someday' price moves high enough to
justify taking profit, you need to determine 'direction' before
taking a trade.

Now consider that point. In order to buy low and sell high, you
must determine if the market is more likely to move up rather
than down shortly after you place your buy. So you look at a
price chart or two, draw some lines or calculate some ranges,
plot an indicator or two, and then make a determination of
whether the market will likely move up or down, and when it is
likely to do so.

This is called 'planning your trade'. You may do this with what
is known as Technical Analysis or Fundamental Analysis. Whatever
means you use, and whatever you wish to call it, they all are
part of the process of forecasting and predicting.

If you are in the business of trading long enough, you will
eventually come across some traders that would snub their noses
at the very thought of forecasting or predicting the markets.
Yet, these very ones would not hesitate to tell you that they
'instead' use Technical or Fundamental Analysis to make their
trading decisions. This reminds me of how in today's society we
refer to Airline Stewardesses as Flight Attendants, homemakers as
Domestic Engineers, trash collectors as Enviromental Specialists,
and other such synonyms.

Forecasting and predicting the Futures and Commodity, Forex and
Stock markets has little to do with wands and pointy hats as it
has much to do with simply determining when the market is 'most
likely' (probable) to move in the anticipated direction. Anyone
who uses any form of Technical or Fundamental analysis to make a
determination of direction or market timing is in fact involved
in a work of forecasting and predicting. Call it what you want,
give it a new name, scorn or shrug it off, but if you are worth
your salt as a trader you need to plan your entry and plan your
exit. You need to decide, ahead of time, what the market is
likely to do and what you are going to do. In addition, you need
to plan on what you are going to do if the market does not do
what you planned. But that is a different subject altogether.

So the next time a fellow trader looks down at you because you
are making a 'forecast' or 'prediction' about market direction
for the purpose of market timing, simply reply; "you say to-may-
toe, I say to-ma-toe".