Trend Analysis

Trend Analysis

Trend analysis is a very effective technique that is employed by the investors in relation to the prediction of the future outcome in the market of the securities. The basis of such predictions is the past data in relation to your objective for which you are seeking trend analysis. There are three important and central aspects in relation to the trend analysis that are short-run, intermediate run and finally the long-run. These are actually the time periods for which trend analysis is developed. There are no particular requirements in relation to the time period regarding the direction that would be deemed as a trend, however, the longer the period will be the more reliable will be the direction of the trend and would effectively assist in the decision making of the investors or the stakeholders.

Trend Analysis and Time Series Data

Trend analysis is principally the application of the time series data. Time series data is such data that is specifically presented sequentially over the selected period of time. For instance, the collection of the data of sales in relation to each month is a primary example of the time series data. The employment of the trend analysis yields general pattern in relation to the relationship between the selected and subject variables of interest. Over and above, it yields and indicates the expected direction of the subject variables in relation to the future periods and thus effectively assists in the precise and persuasive prediction of the market behavior.  

Trend Analysis Application

The results of the trend analysis are used to manifest the behavior of the market that is whether it bullish market or bearish market and following that particular trend information until there is an indication of the trend reversal, for instance, the bull-to-bear market in real-time. The pertinent advantage of the trend analysis is that it leads to the opportunity of profits provided one has followed the information yielded from the trend analysis.

How to use Trend Analysis?

In order to make effective use of the trend analysis and subjecting the applicable data to the analysis, it is quite important that you narrow down the particular market segment that is select the target and particular industry. Subsequent to it precisely select the specific nature of the investment for which trend analysis is sought. This will lead to the observation of the specific performance of the targeted investment type and the precise observation in relation to such factors that have significant influence pertaining to your selected investment type and its consequent behavior. This data will significantly assist the users in the prediction of the market direction that is if it is bearish, bullish, moving forward or otherwise moving backward.

Trend Following

Trend following is that kind of the securities trading system that is fundamentally based on the technique of the trend analysis and its related recommendations in relation to the decision making pertaining to the investment. The particular tools that are used in relation to the making of the trend analysis are computer analysis followed by relevant data modeling.