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Never in my life has something been seen like all these various methods that are coming out to use in commodity price forecasting . Hundreds or different approaches and techniques are out there. Here we'll only briefly look at a few .

Some of them are rather conventional and this author will place an asterisk beside the ones which he personally uses . In this chapter alone there are 36 mentioned ways of price forecasting . This doesn't consider all the excellent tidbits that come through the revelation of P&L charting technical analysis course.

(This author is very happy with P&L charting , for it enables this trader to quantify price action on a daily and intra-day basis . I don't know of any other system where more than trend or congestion the activity of the day means more in the way trading prices are going . The activity of each day by using P&L charting can show the evolution of a congestion or trend, often in just a day . )

However , this author is most irritated by those who believe that their resistance index, moving averages, point and figure, volume oscillator , and who knows what else, – basis, cash , – are the only system which is effective. And, the system they use is the one system that is going to be effective and they never have any real use for seasonals, contrarian opinion, volume, oscillators, momentum indices, indices, other options , and are blinded to the approach of others . ( Okay . I got that off my chest .)

Many times these traders do not even use their own systems and at least to me it seems , fight the market all the time. Assuming a trader has studied a technical analysis course and has a trading plan incorporating several methods of forecasting prices and they are combined to help him profit from the market continually, then this is one trader you can listen to. In the section below that is on planning, the author will portray his own market place approaches and you will be surprised how flexible he is .

There are three basic methods to analyze the market behavior of commodity prices .

1. fundamental
2. mechanical
3. technical

FUNDAMENTAL

Often the market goes in the opposite direction of the fundamentals due to technical and other factors . Fundamental traders are interested in the price movements that are long range and need to be prepared to simply wait. Although they may deny it , but there are just too many external factors to be taken into account , like the response that occurs to influences that are fundamental, shown in fluctuations that occur each day. So there's no need to seek them out for analysis .

MECHANICAL

Methods that are mechanical use price and price alone to determine what action to take and the trader doesn't have to decide on the action. There are three mechanical methods .

1. chart
2. computer summaries
3. moving averages

Going through a technical analysis course will teach these rigid trading rules to be followed faithfully and in most cases it's based on a formula that is mathematical to help predict the right trading time . A mathematical formula is used by the computer, which tells you want to do. One of the great things about using the mechanical method is they can be back checked . Computer oriented methods are often biased towards trend analysis that is mathematical ,using moving averages and other trading systems . The computer can read charts for you and it can formulate and test any and all decision rules .

TECHNICAL

In past decades, a lot of work has been done to get technical tools in place , – all aiming to anticipate futures prices from the statistics of trading , for example, volume, O.I. and price .

The technical approach from the simplest to the most complex and esoteric falls into four broad areas .
1) patterns of the price charts
2) trend following methods
3) analysis of character of market
4) structural theories.
For charting, there are a variety of methods . Here are the most popular:
a. daily high/low/close bar charts
b. point and figure method
c. closing prices and their moving average

The list of approaches there are to technical analysis can be cataloged by the following technical approaches .
1) board or tape reading
2) price chart analysis – which includes the following
a. price trends
b. support and resistance
c. consolidation ( continuation and reversal )
d. price formations and patterns
e. measurement rules
f. wave theory
3) open interest and volume analysis
4) other different technical indicators that may include :
a. relative performance measures
b. periodic price performance study
c. study of opinion and contrary opinion

Later there will be more discussion of this.

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