FAQ: CASH OR FUTURE DATA There is always question in the forums
FAQ: CASH OR FUTURE DATA
There is always question in the forums, weather you use cash data or future data for analysis.
I always use cash chart for analysis and my explanation for the same is as follows:
Whether a futures market is traded just 7 hours per day or around the clock, nearly all suffer from the same GREEKS problems like, the premium decay , interest cost, volatility etc. That decay is the result of storage costs or interest rates or the effect of time on value. Consequently, most futures markets experience continuous value deterioration. Such value decay creates distortion in price structure over the time, which again causes patterns to break rules and creates a different picture, by which an accurate wave or pattern analysis difficult in any situations.
When you focus solely on cash charts, you avoid premium decay, which means you have a chart that never need to be redrawn where as a futures charts must constantly be redrawn as and when each contract expires. When using cash charts, you will find your indicators positioned, retracement levels or wave counts are more likely to be accurate from the start and less likely to change with time, avoiding the need to restructure past patterns. I think this a phenomenon, like many wave analysts doing regularly because they insist on using easily useable, deteriorating futures datas. One must think about it deeply for the sake of precision analysis and change the way they think.
If any one of you are having a valid reason to have a different view, I am interested to learn that aspect, knowing that the price rage calculation should be made separately for the future contracts. Defiantly, like option calculator, one must find a way to get the price derived from the cash value, adding premium or some other means. Not that to get the future price level, we change the chart, the entire psychology reflected on chart, is changed and following it wrongly.
Today @venkitcr was asking the same question last weeks @parasuram and many others raised the same issue. This may be helpful to avoid some doubts.
Padiyaraa®
There is always question in the forums, weather you use cash data or future data for analysis.
I always use cash chart for analysis and my explanation for the same is as follows:
Whether a futures market is traded just 7 hours per day or around the clock, nearly all suffer from the same GREEKS problems like, the premium decay , interest cost, volatility etc. That decay is the result of storage costs or interest rates or the effect of time on value. Consequently, most futures markets experience continuous value deterioration. Such value decay creates distortion in price structure over the time, which again causes patterns to break rules and creates a different picture, by which an accurate wave or pattern analysis difficult in any situations.
When you focus solely on cash charts, you avoid premium decay, which means you have a chart that never need to be redrawn where as a futures charts must constantly be redrawn as and when each contract expires. When using cash charts, you will find your indicators positioned, retracement levels or wave counts are more likely to be accurate from the start and less likely to change with time, avoiding the need to restructure past patterns. I think this a phenomenon, like many wave analysts doing regularly because they insist on using easily useable, deteriorating futures datas. One must think about it deeply for the sake of precision analysis and change the way they think.
If any one of you are having a valid reason to have a different view, I am interested to learn that aspect, knowing that the price rage calculation should be made separately for the future contracts. Defiantly, like option calculator, one must find a way to get the price derived from the cash value, adding premium or some other means. Not that to get the future price level, we change the chart, the entire psychology reflected on chart, is changed and following it wrongly.
Today @venkitcr was asking the same question last weeks @parasuram and many others raised the same issue. This may be helpful to avoid some doubts.
Padiyaraa®