Steemit Crypto Acdemy Season 2 week 10 - Homework Task for [@stream4u]

Greetings to everyone on here, it makes me glad to be part of the Steem crypto Academy and I thank all the professors for all the good and hard work they've been doing. Professor @stream4u has done a marvelous job by trying all his best to prepare us this great lecture. I took my time to go through that and also end up making more research on the given topic 'Price Forecasting' . Am ready to submit my weekly task by professor @stream4u.

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Question 1

What is price forecasting?

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Price forecasting in simple terms is the act of predicting prices of various goods and services or even products by taking into consideration the product in question’s characteristics, demand and other prices of other related commodities for a given time. Companies are to make use of past authentic prices acquired from different sources in order to be able to make a better price prediction of a good or service in future.

Also, Investors or entrepreneurs may be need to determine at which point is the safest to buy or invest in a commodity. At this point, they make use of price forecasting, they take their time to study the rise and falls in prices of that commodity and thereby coming out with price predictions of that particular commodity.
Price forecasting can be a difficult challenge to everyone even with those who are more experienced in that. So there is so much care taken when predicting prices of commodities as one small mistake made can go against you in future.

Question 2

Discuss on why Price Forecasting is needed?

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There are many good reasons on why price forecasting is needed. looking the definition made from the above, price forecasting is obviously important to be considered by all business men, investors and entrepreneurs. Below are the reason why price forecasting is needed;

1. Price forecasting helps investors, entrepreneurs and businesses set their goals and plans. Forecasting gives business the chance to set logical aims that depends on present-day data. Possessing the right data will help business to study and make decisions as to which level of advancement will be considered as a success or winnings. Wielding these goals helps in checking out progresses and also adapting business processes.

2. Price forecasting helps in preparing businesses and firms for an unexpected change within the market. Being aware of not just the current data and analysis of the market but also having ideas of what the near future could bring can aid businesses or firms to adjust their trading strategy and also make amendments to their present functioning to change their results in their favor. Readjustments of the entire market can be made by businesses in order to optimize the resources with the mindset of avoiding loses in future.

3. Price forecasting helps businesses to make proper budgets. Being able to see the changes and trends gives business the idea of where to administer their budget and also where they think will be right to spend much time on. Budgeting is easier when businesses have a perception of how businesses they are investing into operates currently and how they used to operate in the past. With this perception, allocation of resources and time is done properly.

Question 3

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

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There are a lot of methods that are related to price forecasting but the main and popularly known methods are technical analysis, Fundamentals, sentimentals, the cost of production and also rules of hotellings.

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Technical analysis

This has to do with taking a good and closer look at the formerly performance of the rise and falls in prices of a commodity in order to make predictions or at the minimum to figure out the risk of future price movements. Most traders (buyers and sellers) are actively using technical analysis to help them make the right choice. There are many tools that are used in technical analysis strategy for forecasting prices. These tools includes; resistance level, moving averages, Bollinger bands and more.

Advantages of Technical analysis.

For the clear fact that technical analysis is widely use in predicting prices of commodities, many of the users believe that it has developed a satisfying trading technique. As long as countless traders utilize the same indicator motives to look for a resistance and foundation brace levels, it will be resulted to so many traders (buyers and sellers) gathered around the same price points. This motif will be repeated over and over.

Disadvantages of Technical analysis.

There will always be a situation in which a market behavior is unpredictable and there is no an assurance that technical analysis will be entirely accurate. Even though having ideas of a commodity’s historical prices can be of a great use here but that does not promise us success.

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Fundamental analysis

This is a process of determining future contracts prices as at the present and in the future. Analyst use factors like micro and macro-economic data alongside with the industries financial histories to be able to predict how demand and supply will influence price in the future and whether or not the contract has been fairly priced today. This strategy is ideal for analyzing investment recommendations in the long run. The final aim is by coming out with a number that entrepreneurs and investors can compare to with another company’s latest price in order to know whether it is overvalued or undervalued.
Tools that are used purposely for fundamental analysis includes; revenues granted, company’s yearly report, growth on yearly basis and more.

Advantages of fundamental analysis

Fundamental analysis is a good motive in the long run for investors. It proves to us that in the end, its method of predicting prices is good for business performance and has no doubt about being useful in the long run.

Disadvantages of fundamental analysis

Fundamental analysis is time consuming. This method takes so much time because of its involvement of both company and economic analysis. Like I said earlier on it deals with both micro and macro and so needs more time and attention to figure out the factors affecting the market’s performance.

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What is sentimental analysis?

This is either a comment, sentence or an entire article that gives an estimation of whether a text is positive or negative. This can also be called ‘opinion mining’. This analyses the actions of other traders in the market and then making a decision based on that. Sentimental analyses can be used in both fundamental and technical analyses. It serves as an intermediary between the two.

Advantages of sentimental analysis

With sentimental analysis, one can have an idea of what and how customers feel like without reading millions of customers’ comments at once. It’s not possible for one to read thousands of comments within short time, so by the efficient use of sentimental analysis you can have an idea of what the customers are trying to express with ease.

Disadvantages of sentimental analysis

This is might not be able to adequately survey responses from customers in a market. When the analysis analyze the comments wrongly, the developer might make wrong decision based on the analysis in attempt to attend to a problem customers might be facing in the market. This might result to bigger problems.

Question 4

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.

Let's consider the chart below, it's a bitcoin graph i took screenshots of which I will use to explain what its price forecast for the previous years has been like and also what its future could be looking at its current trend.

From this graph, we see that from February 2020 Bitcoin had received an increase which means that from February to early March, any Investor who was ready to double up his profit was suppose to make an invest meant since it was increasing. But in March. we see in the graph that it had fallen, so therefore, if you didn't want to run at lost you should have exited to be on the safer side. But look at the trend form May through June, It was cool for an investor to invest into Bitcoin cause he would have doubled his profit. But the latter part of August was another fall so you will definitely loose much more than you will gain.

Lets also consider the current trend of Bitcoin. You see that from September last year, Bitcoin was not safe to invest. From September through October, November to March this year. Bitcoin has not stabilize, its always receiving a fluctuation making it unstable. But before February it went up and receive a drastic fall in March and has gone up half peak in April, so I will say that Bitcoin will rise looking at the trend from the past once, although its unstable but it has already gone down many times so this could be an opportunity for it to go up. So any investor who is trying to double his profit should make an investment into Bitcoin cause it will receive an increment from April upwards.

conclusion

With all that is said in this article, it is obvious that price forecasting is an important tool every business or firm should consider in order to minimize its chances of being at risk. Also, making good price prediction might result in making decent profits and also bad predictions might result to excess loss which can also to the breakdown of your business. So proper care should be taken when forecasting.

Thanks for reading !!!