- By Asad Dossani, Author, The Lucrative Derivative Report

Asad Dossani

Each day when we read the news, there is a certain probability that there will be a story of a new corruption scandal. It happens regularly enough that we are not usually surprised by it. There is a Wikipedia page entitled 'List of Scandals in India', and it lists all the major corruption scandals that have been uncovered, going back to the 1940s.

What is most interesting about this list is that the number of scandals increases year by year. The last three years have seen the greatest number of corruption scandals. 2012 is the year with the most scandals, and we are not even halfway through this year. Going further down the list, the number of scandals decreases significantly. Each year has fewer scandals than the year before, and some years there are no scandals at all.

We may naturally infer that corruption is getting worse, and than we are more corrupt today than we have ever been. Most of us would probably agree that today we are more likely to hear of a corruption scandal than we were 10 years ago. Again, this would lead to the conclusion that corruption is getting worse.

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There is another explanation. Perhaps corruption has not really changed over time. Even though we hear of more scandals today, it is quite likely that there was as much corruption 10 and 20 years ago. The only difference between now and then is that now we are hearing about it; back then we did not hear about it.

Rather than concluding that corruption has gotten worse, it is as likely that disclosure has gotten better. Today, corruption scandals are more likely to be found out and reported on, whereas previously we would not hear about it. The awareness in the media and society of corruption today is greater than in prior years.

The first step to fixing any problem is to admit that you have one. Perhaps the reason that we have not been able to fix corruption is that we were never as aware of it. Today, we are more aware of this than ever before. As scandal after scandal emerges, we get more and more angry about the situation, and the more we want to do something about it.

We need not view the increasing number of corruption scandals today as a sign that we are more corrupt than ever. It is more likely that as a nation, we were as corrupt 20 years ago as we are today. The difference is that today we are more aware of this. Now that we admit we have a problem, we should take steps to fix it. And hopefully that list of corruption scandals will start to decrease in future years.

Technical Analysis

In last week's article, we introduced the subject of technical analysis. This week, we'll continue our discussion and talk about one of the most useful indicators in technical analysis: the moving average.

Moving averages are a way to measure the trend of a particular market. The 20 day moving average is the average price over the last 20 days, the 100 day moving average is the average price over the last 100 days, and so on. If we plot the moving average on a chart, we can get an idea if the market's overall trend is up or down.

For example, if we plot a 50 day moving average on the Nifty index as of today, it is downward sloping, and tells us that the market is in a downtrend. We can create many trading strategies using different moving averages to help us determine the market's trend, and the direction we should trade in. Next week, we'll talk about a moving average trading strategy; and show you how to apply it for yourself.