Predictions vs Prediction Signals

As a default, the Prediction Wizard does not plot the prediction it is making, only the resulting buy and sell signals. If you want to see the predicted values, just go to the Insert menu, select Existing Data/Calculations, and then insert the “Out-of-sample signal”. That is the prediction. You can also insert the data series called “Actual Signal” for comparison of actual vs predicted. However, there are two things you need to keep in mind:

1. The prediction signal is plotted on the day the prediction is made. So if it is Monday, and you are predicting 2 days ahead, then the value plotted on Monday is the prediction for Wednesday. The actual signal is the same way. If you’d rather see the prediction plotted on Wednesday, then go to the Tools menu, select Options, and then the Predictions tab. Click on the checkmark called “List Prediction Data Series”. Thereafter, anytime you build a new prediction, the “Out-of-sample” data series will be available for plotting. When it doesn’ have SIGNAL on the end, it is a prediction whose value is plotted on the bar the prediction is supposed to come true.

2. You should never expect the magnitude of the predictions to be correct if you are predicting something normalized like change or percent change, unless you have darn good inputs. The predictions may be much smaller in magnitude than the actuals. However, if you get the direction right, which is often the case, you can make money regardless of how good the magnitude is.

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