Discussion in 'Trading' started by libertad, Aug 14, 2005.
Is short term forecasting.....linear or nonlinear ???
It can be done either way, but non-linear is most likely to be the more effective.
If one were using the rational substitute for forecasting (anticipatio) the best characterization, mathematically pseaking, would by to use the philosphy of history known as "a symmetric philosophy of history". Google: Danto, Columbia University, NYC
The axis of symmetry is now give or take a few milliseconds.
You first responder actually has it backwards with respect to a point in time if he even had a focus on time at all.
My point was that forecasting can be done either in linear fashion (regression, for example), or non-linear fashion (genetic algorthims, neural nets).
The question did not address the specifics of what exactly "short-term" means. Are we talking point to point? Is it ticks (no time element), minutes, hours, days?
I claim no expertise, but the research I've been made aware of seems to point to non-linear methods have better success forecasting price movement in the financial markets. I have yet to be convinced of that in a meaningful fashion, by the way, but neither am I convinced that linear methods do particularly well either.
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