Broker: A person/company that negotiates transactions between a buyer and a seller. Not to be confused with an agent, who acts on behalf of one specific party in its dealings with another.

What is an Analyst

What is an Analyst - text

What are analysts?

Analysts are people or organizations that collate important information from various sources, news wires and previous data. They then analyse this information and from this they then make expectations of what they think the figure or data release should be.

There are many analysts out there, and it must be noted that different sources and analysts carry different weight in the information they predict so you need to be aware of where you are getting this information from

Analysts give us an insight into what institutions, organizations and even what whole sectors are thinking.  Their value should not be understated given that they will have expert knowledge in the markets in which they provide analysis on.

 In the run up to a major economic data figure being released, analysts will provide estimates on what they expect the figure to be, factoring in a number of variables which will influence their estimations

For example, prior to a USDA Grain Stocks Report being released, a grains analyst will provide their expectation for the world soybeans stocks

based on factors including, but not limited to;

·         the status of crops,

·         weather

·         global export demand,

·         domestic soybean demand,

·         geo-political issues, and the

·         state of the global economy,

·         previous stocks reports, among many others.

Analysts will inevitably hold varying views on the figures which they expect to be released.  When deducing an expected figure, a median figure of all these estimates is calculated to give us a general feeling of what the market is looking for.

Not only is this information vital as all market participants will be looking at this. It also saves traders a lot of time and effort from trying to create expectations themselves.

For example a grains trader in Japan cannot easily travel to Iowa to visit the corn belt and see what the crop looks like, and if he does, he may not know the difference between a good and very good crop. 

When you know the figure that the market is looking for, it can help you to react faster and make an instant decision of what effect it will have on the market as soon as it is released, than if you weren’t aware of the market expectation.