Thread: Forecasting financial Markets, The Second

Previously, Profesor Data already promised that will give an explanation, If invested at financial markets were NOT gambling... how the proof?
How the answer when someone give you a question like that? Well, first, you have to ask back, do you think speculating at the business world were gambling, if answered yes, well it's meaning this guy was quiet strange ^^,
where in this life, that not contain speculation elements, even investing at deposit rates was not truly "risk free" what if the bank went bankrupt.Has already been many cases like that, and lot of customers money were charred. so, although it was safe, but not completely safely, the key is, you have to be really careful about where your money will be invested and how.
If the answer was not, then you have to answered that investments at financial market was the same like invested at the real sectors, and it was true, essentially at the stock market, if we buy 1 share means we are a company owner and entitled to participate at the general meeting of shareholders, and participating at profits (DEVIDEN) but our voice is only for the number of shares we hold, so also at the forex and commodities, there are actually real elements, only we speculate on contract here .
BUT... HOW THE PROOF?

if we talk about the proof means we have to discuss about probability theory, in fact, when it was first launched, it was used to predict gambling (gambling science ^ ^). but at development, this theory has been lot of used at the economy science, just as correlation Theory that we already have discussed at previous articles (forecasting financial markets, the first), it's the development of probability theory.
so, what is the difference between gambling and investing, as well as similarities with the business. actually there are several types / kinds of probability but actually only 2 of the most important, that was make a difference between gambling and not gambling.
First, Indipendent probability or stand alone, ie, an incident occurred, and no other events that affect it, it means it's a lucky evidence because no other events that affect to it or indipendent. Well .. This was called gambling cause it's lucky evidence, (although a knowledge itself have a theory to studied{the science of probability of course^^}), for example, on the dice (classic ^ ^) evidence of number 6 on the dice out there were no parameters or just random or lucky (but if at 10 throw number 6 out 7 times, would you dare or not, guess the number 6 came out at 11 throw haha .. ^ ^ that's the science.)
actually no one really indipendent, number 6 could come out 7 times in 10 tosses it was strange wasn't it.., but certainly we can dig more deeply further, and certainly also that determining factors were random or uncertainly, but look at the another probability type like this one.. it's different !!

Second, Conditional Probability or Parametik, well this is the type that we will dig further for investment knowledge, including at the real sector, it's include with this type of probability , namely Parametik Probability (probability by using parameters), means that one evidence was happened because there were other events that affected to it (having parameter). could you see the difference, which one was lucky or random while the other one was having parameter or no random (having other events that affected to it before).
Here we find the 2 variables: Variable X and Y, where Y is the dependent variable and X is the independent variable.
to more clearly look at the following equation:

Y=A+Bx (we see only Y and X , Bx = B x X)(B= betha, slope, risk, sensivity)

In this equation we can clearly see that the variable Y will move up or down, it all depends on the variable x isn't it.
(Profesordata have a good Theory to look deeper at this equation in conjunction with investment analysis and we will dig further in the next article, therefore continue to support ProfesorData, joint with profesordata forum, free, you can discuss more with the expert, nothing to buy, profesordata only want traffic http://profesordata.com/forum/index.php find other usefull articles).
For example, let's say X was the result of oil production at middle east and Y is the price of oil, if oil production or reserves dropped dramatically .. then you can roughly guess where the oil price run (Y), particularly at the U.S. as the world's largest oil consumption ^ ^ (WOW.. now you can speculate the oil price ^ ^).
Well.. now you can already see the difference right .. well, now no one in this world that can so easily say that investment the financial markets was gambling^^.

Mutual funds come in a number of different categories, which all vary according to the rates of return, risk factor involved as well as the period of time they take to mature. An index mutual fund is a category of investment that seeks to ensure stability of a specific financial market, regardless of the prevailing market condition, be they good or bad. They do so by tracking the performance of the securities in a particular investment.

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