Typical Futures Trading Process---II

Indeed, software is very important, but if sellers of expensive software tell you that since other traders, who are your competition, have expensive computer setups, you need one too. This isn’t really true.
Those who can’t trade profitably without a computer probably won’t rely on using a computer very much though the computer indeed makes life better.
Here list two primary analytic approaches for deciding when to take a futures position: fundamental analysis and technical analysis. Fundamental analysis involves using economic data relating to supply and demand to forecast likely future price action. Technical analysis involves analyzing past price action of the market itself to forecast the likely future price action.
While there are differences of opinion about the relative merits of the two approaches, almost all successful traders emphasize technical analysis. There are a number of reasons for this. First and foremost is the difficulty of obtaining exact fundamental data. While various governments and private companies publish statistics concerning crop sizes and demand levels, these numbers are gross estimates at best. With the current global marketplace, even if you could obtain exact current information, it would still be impossible to predict future supply and demand with enough accuracy to make commodity trading decisions.
Technical analysts argue that since the most knowledgeable commercial participants are actively trading in the markets, the current price trend is the most accurate assessment of future supply and demand. If someone is correct that for fundamental reasons, prices will likely move up strongly in the future, the commercial participants who have the greatest knowledge and influence on the markets should certainly be moving the price upward right now. And vice verse.
Therefore, almost all successful speculators learn to follow price action and not try futilely to predict turning points in advance. They seek to trade in tune with the large participants who move the markets.
The technician believes that anything that can possibly affect the market price of a commodity futures contract–fundamental, political, psychological or otherwise–is actually reflected in the price of that commodity. It follows, therefore, that a study of price action is all that is required. By studying price charts and supporting technical indicators, the technician lets the market tell him which way it is most likely to go. The chartist knows there are reasons why markets go up and down. He just doesn’t believe that knowing what those reasons are is necessary.

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