Dear all members,
In stock market , forex and commodity market many brokers or some external firms give a sure shot suggestions for Trading to the Daily Traders with a monthly or annual charge. For example : they give 5 Intraday calls daily as Buy or sell particular share with Target of some price and stop loss of some price.
When looking after their performance the calls given by them are achieved to extent of atleast 80%. which is a good thing. But my doubt is how to they able to predict it with good success rate. Are they using Technical Analysis or they do fundamental analysis? If they use technical analysis what kind of analysis they incorporate?
They don't. It is hard to contradict your statements without you giving specific examples. However if there were predictions such as you describe, everyone woukd follow them which in turn, by the rule of reflexive markets, would automatically make the predictions invalid. In the markets nothing is certain.
Dear Lars,
I too understand in market nothing is certain but still the performance shown by these firms is unbelievable that's why I have posted a query. and remember the sure shots given by them are not 100% accurate. but almost 80% of it achieves the target. That's why I wonder how could they do it.
There is a tool in the area of security analysis and I am unable to recall it exactly, which suggests if a particular security is underpriced or overpriced. Underpricing/Overpricing would lead to buying/selling of these securities under the premise that markets corrects itself. Any security would not be too away from its intrinsic value for very long unless new information (shocks) is absorbed in the market which in turn reflects in the price of the stock of interest.
It is a combination of both fundamental as well as technical analysis that is used to forecast the possible behaviour of a stock based on its historical pattern of movement and the fundamental figures.
The reason for correct forecasting of these broking houses is that they are well connected and well informed with all the parties involved. Knowing every possible bit of information that might affect the price and the extent of that effect helps them suggest possible course of action. It is a mixture of diligent fundamental analysis, observant technical analysis, dormant market sense and a certain amount of courage. To an extent the herd mentality of the market participants also help. e.g. If a broking house announces that the shares of XYZ is a great buy as its pices are going to rise in foreseeable future. Lot of people would start buying it thus increasing the demand for that stock and hence pushing the price up and vice-versa.
Hope I made it somewhat clear
The point that brokers are connected and due to the call given the buying or selling is done by the people gives some sense in understanding the price moment. When you recall the name of the technical analysis kindly mention it below. Thank you for elaborate explanation
front running is the practice by market-makers of dealing on advance information provided by their brokers and investment analysts, before their clients have been given the information. but how do the brokers and investment analyst get the information?
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