Steemit Crypto Academy - Course By @stream4u - All About Price Forecasting Submitted by @silencewan

INTRODUCTION

Hello Everyone!!!
I am much excited to say that, this week's steemit crypto academy homework task is really interesting. Interesting because we really have to put so much effort into it. But most importantly, I really want to say a very big thank you to professor @stream4u for his wonderful lecture note. I must say that it was really helpful and served as a very good source. Thank you once more. This week's homework task is based on Price Forecasting. Now we will be looking into detail what it is. I will also give you an overview of price forecasting before setting the ball rolling.

Chart designed by me on Photoshop

@silencewan (All about Forecasting)

BRIEF HISTORY OF PRICE FORECASTING

Over the last 60 years, Price forecasting has been used in revenue management. Price forecasting from the survey has over 80 articles from recent times which also seem to trace the revenue management, forecasting models. From research, the natural breakdown of these forecasting has sub-categories that are covered within the airline industry including the origin-destination forecasting and whether to collect nor reject this data. Hybrid forecasting is considered in less restricted environments but with this, there is a user adjustment. The last one is also the forecast accuracy or the choice-based forecasting and lastly, revenue management forecasting was reviewed in the hotel and other industries.

This is a brief history of price forecasting. I will then answer questions that follow by professor @stream4u

Question One

What Is Price Forecasting?

Price Forecasting can be explained as a technique that uses data (historical data) as inputs that bring out estimates that predict the future trends or the direction of a business firm. But in business utility forecasting, it's employed to determine how the firm should allocate their source or budget or in fact plan for future anticipation of expense for some period of time.

Looking at price forecasting in the narrow sense, we could say that its objective is to produce a better forecast but looking at it in a broader sense, price forecasting's main objective is to improve the performance of an organization yielding them more profit, revenue, and most importantly to increase customer satisfaction

Explaining what price forecasting is, I will also like to mention some major method involved in price forecasting

1. Historical Analogy Method: In this method, past sales results of similar products are matched or used in other to predict the sales of that new product at hand

2. Survey Method: In this method, answers are taken from questions asked by people whom they feel they have resourceful information.

3. Opinion Poll: this has to do with a human research survey considering the public opinion from a given sample

4. Business Barometers: These are data points that take in place the trends in the market or the general economy.

5. Time Series Analysis: In this analysis, a statistical technique that deals with time-series data, or trend analysis is employed.

6. Regression Analysis: A statistical method used in the estimation of relationships between a dependent variable and an independent variable.

7. Input-Output Analysis This involves a form of microeconomic analysis which is worked on the interdependecies of different industries or different economic sectors.
   The above mentioned are just some methods which are narrowed when price forecastings is to be performed.

But for the purpose of this course, there are three major types of forecasting analysis. These three are
technical, fundamental and the sentimental way of analyzing.

Question Two

Discuss on why Price Forecasting is needed?

Sometimes we need to make our own investigation before going into a business. It is not safe anywhere to go into trading or investing withough looking at the outcome of what you investing, what this means is, there could be lapses so therefore one must look into the future of what actually will happen when you invest an amount of money into a specified business knowing what the outcome will be. This is why price forecasting is needed. It is very important to price forecast before taking decisions of investing.
You look into the future to know whether you can loose or make profit. if it feels safe then you make a move but if not you have to reconsider your decisions.

We can also say that, price forecasting is valuable because it gives the ability to make informed business decisions and come up with data-driven strategies.

SCENARIO

Three ways Price forecasting can help your business excel

1. Helps set goals and plan
   Forecasting makes it possible for businesses to set measurable and reasonable goals looking at the current and historic data they have. When you have an accurate data and an accurate statistics to analyze can help entities on making decision on the change, growth or even improvement will be determined successful.

2. Helps Budget.
   This gives the visibility into the potential trend, this helps these entities to acquire more knowledge as to how to allocate their funds or budget and the time spent is manulated to best suit in what is suppose to be done.

3. Helps anticipate change within the market
   Not only knowing about the current data but also the projections of what might possibly happen in the future helps these entities or businesses to make changes or adjustments to their strategies and changes in their current operations so as to change what their outcome could be

So this means that with this three points mention above, it gives a chance to a business of excelling when it is practiced this tells us how much importance price forecasting cost. Not only that but considering the benefits of forecasting before anything done outweighs the disadvantages. So in a nut shell, we need price forecasting in
Giving this scenario (three points) will explain to you why its necessary we indulge in price forecasting before making investments.

Question Three

What Methods are best you feel for Price Prediction/Forecasting.

From the given resource by professor @stream4u, he stated emphatically the three best methods for price forecasting even though there are other tools or techniques used and I also tried mentioning some in my article, but I will based on the major three that best fit and would be good for price prediction/Forecasting. There three methods are;

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Technical Method:
This method deals with forecasting the direction of the prices through the study of a past
market data. Price and volume is the primary objective. This method helps or aid traders to breach the gap that exist between the market price and intrinsic value.

source

Sentimental Analysis

This deals with trading with the masses and perhaps more importantly
trading against them when the market's gone too extreme. The data analysts seeks public opinion when the data at hand is positive, negative or even neutral, this aids him conduct market research and also monitor the brands and product reputation which allows him understand customer experience. This I wouldn't consider asthe top most based on the way its carried out, Market leaders gives out decision which are consider but could be very dangerous sometimes.

Below is a diagram that explains the Sentimental Analysis.

source

Fundamental Analysis

In this type of method, related economic and financial factors are measured this is carried out by measuring the security's intrinsic value. This is done for an investor to know or compare current price in order to see whether his measurement are undervalued or overvalued.

source

Comparison Between the three

Technical Analysis	Fundamental Analysis	Sentiment Analysis
short term approach	long term approach	long term approach
finding right time to exit or enter	deals with finding intrinsic value of a financial instrument	this involves uniform traders
focus on price movements & market psychology	deals with industry data & competitors performance	deals with trading against the masses
Here charts are required	But in this, financial statements are needed	Traditional machine learning methods such as Logistic Regression, Naïve Bayes e.t.c.
they focus on both forward and backward based on their vision	looks backward	market traders decision
its function is for investing	function is for trade	determining the emotional tone behind a series of words, used to gain an understanding.

Question Four

Take any Crypto Asset Chart graph and explain how to do Price Forecasting? OR Take any Crypto Assets Chart graph & as per its current price tell us what will be its future price for next 1 week or 1 month? You can predict for any direction up or down but explain it properly on what basis you have predicted the price.

I will demonstrate the price forecast of Bitcoin from screenshots taken from Giottus. website
I will explain briefly from 2018 how bitcoin has fared in the system.

From the chart above, an investor who is willing to make profit will not want to invest in Bitcoin, it probably experience so much challenges so if an investor interested in profit will definite run at lost because of the trend.
But considering from May to September 2018, Bitcoin had gone above the normal based of the previous trend. So an investor who wants to make profit should go in and make his buys cause it was probably increasing the. But late 2018 to 2019, I will not advice any trader who wants to make buys to invest, cause you will take loose more than you invested cause it went through a huge fall, so definitely you will run at a lost if by October 2018 if you hadn't sold out your shares.

But lets also consider this chart, a current chart of Bitcoin, it has experienced lot's of falls from its peak and currently rising. In February through to early April Bitcoin fell massively but its currently rising, So I will advice that for an investor who is ready to double up his profits can invest into Bitcoin its possible it might grow up like it did in January 2021.

Conclusion

I will conclude by saying that price forecasting is really necessary in our industry or trading. It makes investors know when to make profit or lose. And I want to believe no one will want to loose money when investing. So price forecasting is really necessary and important.

Lastly, I say thank you to professor @stream4u for allowing us learn so much from your resource and making us explore the outside world.
In conclusion, price forecasting is necessary in every trade/market. It Position the investor towards making profits and also to business who tend to make proactive actions instead of being reactive for both budgetary and decision making.