Weather forecast and trading

Discussion in 'Trading' started by dst888, Jul 10, 2010.

  1. dst888


    Weather forecast is now much more accurate and timely than it was about 10 or 15 years ago due to technology advance and computer power. Basically current data are collected and analyzed and predictions are made based on working models and algorithms. Trading is much the same or similar game. So if we can extract and apply what made the modern weather forecast successful into trading systems, we should build up strategy that offer high probability of profitability. Of course, trading is involved with human activity and which is less predictable
    than natural forces.
    One practical issue is that how useful are the indicators and how to use these or create more appropriate indicators to build systems to predict the price movement. People often comment that an indicator/certain type of indicator is often right at one time but wrong at another time and lag behind the price movement, which is completely true. However if you can integrate a set of indicators together to make them correct each other, as they reflect the preceding data in their own unique way, you may get a better picture/direction/prediction about where the price is moving and the quality and strength of the incoming trend, or the market is in a chop mode as conflicting signals are all over the places among the key indicators that build up the system.
    Any comments?