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What Are the Best Tips for Global Trend Analysis?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 20 April 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Global trend analysis is a type of business tool that seeks to determine future trends in world markets based on what has occurred in the past as well as what is happening presently. The goal of this type of market analysis is to accurately predict which trends will emerge within those markets as well as how long the trends will continue. Doing so makes is possible to structure investment activity accordingly, allowing the investor to ride the trend until it is anticipated to crest, then begin to withdraw before there is the opportunity to sustain a loss.

One of the key components of global trend analysis is to understand how a given world market has functioned in the past, given a specific set of circumstances. The general idea is that if those same circumstances are likely to develop again, it is possible to learn how to make the most of those market conditions based on what has happened before. For example, if an investor who is interested in a possible shift in the rate of exchange between two or more national currencies, identifying some period in the past when a similar shift occurred, analyzing the events surrounding that shift, and following how the currency market moved during that time frame can help the investor create a strategy to buy and sell those currencies at specific future points in time, riding the trend and maximizing the profits from the strategy.

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Another important aspect of global trend analysis is to allow for the potential of new factors to change the market response in some manner. This means that if an identified trend occurred in the marketplace 20 years ago, the investor will need to determine not only what is alike about the past and present situations, but also what is different. Doing makes it possible to account for variables that may be missing with the current trend as well as allowing for the influence of events that were not present in times past. When this process is managed with precision and accuracy, the task of competently using global trend analysis to project the movement of the global trend is much easier.

In addition to using global trend analysis to determine when and how a trend will affect a given market, it is also important to project just how much influence that trend will have on the marketplace. Some trends may have a significant impact on multiple markets around the world, or have a more localized effect. Ascertaining the range of impact is key to determining what and how much of certain investments to purchase, hold, or sell during the course of the trend, and which markets to participate in for the proposed duration of that trend.

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