Seasonal Index……“Time is Money” Part 1

Hello Friends here we come up with our another write up on “SMC Gyan Series”

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Seasonal Index……. “Time is Money”

In this Blog, we are going to read more about the old saying  “Time is Money” which is represented quite aptly by SEASONAL INDEX.

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Seasonal Index……. “Time is Money”

The old T saying “Time is Money” is rightly represented by Seasonal Index.

To maximize profit, investors should have good knowledge of markets where demand & supply of commodities have their own seasonality & the future prices of agri contracts with volatile market psychology, triggering stop-loss orders, hitting targets & speculator closing out of positions.

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What is a Seasonal Pattern?

Seasonal Indices are the virtual mirror image & identifiable seasonal movement on commodity data between two dates of the recent past, influenced by general price trend, sentiment, exchange rates etc.

It provides a better way of understanding the repetitive and predictable movement, but one should not be swayed by preconceived ideas about them, as they do not determine the actual signals, but the time of execution instead.

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Reasons for studying seasonal variation :

The reasons for studying seasonal variation are:

· To learn how seasonal forces can affect the commodity market.

· Better understanding of the price movement within a time series.

· To learn how seasonal’s can be used to identify the trade timing of a market.

· Prediction of the future trends & magnitude of price changes.

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Stay Tuned for more on this.

In next blog, we would touch upon the points related to

the analysis of the seasonal pattern of the commodity prices,

how an annual average method can be used to generate a seasonal pattern in predicting the future prices of the commodity,

and seasonal pattern in the year 2009.

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