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Chapter 7. How to analyze the markets fu... > Which is the best way to go?

Which is the best way to go?

Correct fundamental analysis can make you money, and so can a good technical plan. In either case, a good forecaster can go broke if he is not a good trader. A good trader can make money regardless of whether he can ascertain the correct fundamentals or technical tone of the market. I believe that a marriage of the two, combined with a sensible money management plan, produces the best results over time. In my experience, the best trades come when solid fundamentals (as we see them) agree with the technical action of the marketplace. The subsequent two chapters explore the idiosyncrasies of the technical world. However, because you need to know what it is you're trading (although I know a soybean trader who had not even seen what a soybean looked like until after he had spent his third successful year in the pit), we'll first delve into a brief overview of the fundamentals inherent in the major markets we will be trading. Although this brief introduction will not automatically make a good fundamental trader of anyone, it will give the potential speculator background information about the relevant industries as a starting point. As the next step, I suggest you consult the Web sites of the Exchange for the market you are most interested in trading. They all provide detailed fundamental information on the markets they list.

There are hundreds of Exchange-listed futures contracts globally, and most of them have liquid options markets. (Unfortunately, this book does not have enough space to cover them all.) Some do not trade very actively, and some are so specialized that they should be left to those who know. So this book, for example, doesn't cover raw silk or dried cocoon (which is listed on the Manila International Futures Exchange). Instead, I've arranged the major futures markets into four groupings:


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