Tidbits – written by market expert Joe Ross. Sometimes these forex transportation chicago agree and sometimes disagree. What is your opinion on the sentiment reports?
Although these reports sound scientific, nothing about the trading markets can be measured with scientific precision. There is no practical purpose for measuring a market precisely and most market measurement is at best only a rough estimate. When we measure futures markets, we are basically also measuring human behavior, and human behavior is not easily measured. When it comes to forecasting financial market conditions or market sentiment it makes no sense to strive for extreme accuracy. Commodities futures and forex market prices are based on human opinion.
An estimate of trader or investor opinion is merely a guess because not everyone has the exact same opinion, and because it is difficult to accurately measure an opinion. The best a commodities market sentiment report can offer is a statement of probability based on a few important assumptions. Let’s face it a sentiment report assumes that the universe being measured is actually real. Another assumption is that the measurement of the opinion is reliable. I have seen this phenomenon in action. When I owned a farm and mingled with other farmers at various meetings, it was obvious that the farmers never told the county agent their true planting intentions. The assumption that the universe was real was often met because the agent did indeed poll farmers.
The second assumption that the opinion was reliable was hardly real because for various reasons some farmers may have lied to the agricultural agent. It’s difficult to measure a market opinion. And just because an opinion or intent is stated, doesn’t mean the person giving it will act on what they say. These issues have a direct bearing on forex, futures, stock market and commodity trading. It is also accurate to say that on seeing the current forex price or latest market conditions, forex traders react in certain predictable ways. A major principle of all market theory is fx Forex traders and investors react to certain market conditions in a consistent and predictable fashion. Gann visualized these reactions in the form of geometrical angles, shapes and patterns.
Charles Dow saw them as an interrelationship among the industrial, transportation, and utility sectors of the markets. It has proven to be very difficult to measure human behavior, and people do not respond with regularity to situations, even identical situations. We are then assuming that humans will always act the same way to certain situations and conditions. However the truth is that forex trader do not act consistently. Our estimates of what futures traders and investors will do are merely best guesses, and potentially inaccurate ones.