Why spending too much time on forecast?

How do you know when a trend has started? Ended? This forum is for discussions about trend indicators and signals.
Post Reply
oem7110
Roundtable Knight
Roundtable Knight
Posts: 381
Joined: Wed Jul 12, 2006 9:33 pm

Why spending too much time on forecast?

Post by oem7110 » Tue Oct 25, 2011 3:17 am

If I forecast that the market will go up, I would not enter long position until breaking the down trend, so can I simply follow the trend? and don't need to spend time on forecasting the market, such as watch news, charts ...

If I forecast that the market will go up, but the current trend on market is down, it will not be wise to enter long position at this moment, forecast is forecast, which is not reflect the real market's activity.

So does anyone have any suggestions what advantage of working on forecast on market? if I can enter long position based on trend?
Thanks in advance for any suggestions

SimJimons
Senior Member
Senior Member
Posts: 31
Joined: Mon Jun 20, 2011 9:59 am

Post by SimJimons » Tue Oct 25, 2011 3:44 am

I probably don't understand your question but my answer would be that either you trust your forecast, and if so bet on it no matter what the current trend is, or you believe in trendfollowing, betting in the direction of the trend. Over the long haul, most people are unsuccessful doing forecasts, which is why systematic trading attracts interest. Making directional forecasts in the direction of the trend is obviously redundant :) Having said that, perhaps you are good at forecasting something else than the exact timing of a trade, like the perfect exit point ones the trade moves in your favor. Or, perhaps you are good at forecasting the five year trend (difficult to prove though), in which case you can use a shorter term trend system to time the actual trades, but only in the direction of your forecast. Most CTAs make some sort of "forecasting" when they design their systems, be it which instruments to include or the weights between them, the parameter settings, etc. Everything in a system that isn't totally random is to some extent a forecast...

rhc
Roundtable Knight
Roundtable Knight
Posts: 464
Joined: Tue Nov 18, 2008 8:46 pm
Location: Oz

Post by rhc » Tue Oct 25, 2011 9:54 pm

Here is one take on why forecasting is a mugs game
viewtopic.php?t=8350&highlight=ritholtz

From the aforementioned link:
Anyone with an intense emotional interest in a subject loses the ability to observe it objectively

Moto moto
Roundtable Knight
Roundtable Knight
Posts: 427
Joined: Mon Jun 01, 2009 4:12 am
Location: once again in the UK

Re: Why spending too much time on forecast?

Post by Moto moto » Wed Oct 26, 2011 4:06 am

oem7110 wrote: So does anyone have any suggestions what advantage of working on forecast on market? if I can enter long position based on trend?
Thanks in advance for any suggestions
bragging rights when you are right and sympathy when you are wrong - should you so choose to tell people that you were wrong. :)

Plus there are forecasts and forecasts, some are based on probabilities and backtested ideas, history and numbers, others are just gut feel....like today, I think its going to snow because my corns are throbbing.

Eventhorizon
Roundtable Knight
Roundtable Knight
Posts: 229
Joined: Thu Jul 08, 2010 2:36 pm
Location: Boulder, CO
Contact:

Post by Eventhorizon » Wed Oct 26, 2011 12:42 pm

moto moto,

Your corns are prescient - we have 4" of snow and it's still coming down!

Moto moto
Roundtable Knight
Roundtable Knight
Posts: 427
Joined: Mon Jun 01, 2009 4:12 am
Location: once again in the UK

Post by Moto moto » Wed Oct 26, 2011 2:08 pm

there you go eventhorizon....I could be on Bloomberg TV telling people about my forecasts. :)

(I plan to be Steamboat - Colorado - your way I think next Jan - so I hope my corns throb every night, and the sun shines during the day)

Post Reply