Unique Lab November 12, 2024Ma analysis isn’t simple to master despite its many benefits. In the process, errors could lead to incorrect results with serious consequences. Recognizing these errors and avoiding them is crucial to unlock the full potential of data-driven decision making. Most of these errors result from omissions or misinterpretations, which can be easily corrected by establishing clearly defined objectives and promoting accuracy over speed.
Another common mistake is to think that an individual variable is in an average distribution when it does not. This can lead to over-/under-fitting their models, compromising the prediction intervals and confidence levels. This can also lead to leakage between the training and test set.
It is crucial to choose an MA technique that is compatible with your trading style. A SMA is the best option for markets that are trending, while an EMA is more reactive. (It removes the lag in the SMA since it gives priority to the most recent data.) Furthermore, the parameter of the MA should be chosen carefully depending on whether you are seeking either a long-term or short-term trend (the 200 EMA is suitable for more time).
It is also essential to always double check your work prior to sending it to be reviewed. This is especially true when dealing with large amounts of data, as errors are more likely to occur. You can also have an employee or supervisor look over your work to identify any errors you might have missed.