Forecasting Methods in Financial Markets in the Digital Economy

Abstract

The aim of this article is to study and summarize the principles, methods and value characteristics of generally accepted types of analysis of financial instruments and an alternative type of analysis — behavioral finance, which became relevant due to the development of the digital economy. Development of the economy constantly requires mobilization, distribution and redistribution of financial resources among its spheres and sectors. An important role in the implementation of this process is played by financial markets. Financial markets are a means of ensuring the normal functioning of all economic sectors as well as of combining state, institutional and individual interests; protecting the population’s money from inflation; improving their financial situation. As a result of the study, the main aspects of behavioral finance are highlighted, and examples of the most common mistakes of investors are given. It is proposed to use Sentiment Index to assess the state of the market and more effectively forecast financial instruments. Using this index, government agencies can track financial risks that arise from speculations of media and financial analysts. The results of the study can be of importance for both the investment and political sphere. In the political sphere, instability can have a negative impact on the functioning of markets and pricing of assets within the state and in the international market. If financial risks are accompanied with a change in investor sentiment, this leads to an outflow of capital and financial instability in the country, but using only the method based on building Sentiment Index is not recommended.

Keywords

• financial markets
• digital economy
• speculation
• risks