Trend & momentum analysis
The First4Trading analysis is conducted daily and involves quantitative methods together with aspects of behavioural finance techniques:
- correlation and probability analyses are performed;
- the rate of change of price is measured over varying timeframes because price momentum is vital to the strength and longevity of the European Sentiment Wave;
- trends are scrutinised and assessed using linear, average and statistical measures because if the European Sentiment Wave acts in the direction of current price trends, its effect is enhanced than when the Wave is counter-trend or "swimming against the tide".
A systematic approach
The European Sentiment Wave™ has 3 distinct moments - direction, magnitude and probability. Each of these moments is analysed quantitatively and qualitatively. This analysis whilst systematic does not constitute a system that can be applied mechanically. Rather it is an approach that is applied by hand to each market and financial instrument covered by the First4Trading research team. In this way, the research method is customised to take account of the individual behaviour and characteristics of each market and financial instrument.
Individual trading strategies
The daily methodology applied attempts to quantify various factors: recent market sentiment, price momentum, trend analysis, % of new price highs vs. % of new price lows, levels of support and resistance to name but a few. These factors are then qualified so that a trading strategy is constructed for each financial instrument under consideration. The result is a high probability of success in trading from the market open by prediciting the power of the European Sentiment Wave™.