Ma analysis is not easy to master despite its many benefits. Many mistakes occur in the process, resulting in incorrect results which can have grave consequences. Recognizing these mistakes and avoiding them is essential for harnessing the full potential of data-driven decision making. The majority of these errors result from mistakes or misinterpretations. These can be easily corrected by setting clearly defined goals and promoting accuracy over speed.
Another common error is to think that a variable is usually distributed, when it isn’t. This can lead to over-/under-fitting their models, resulting in lower the prediction intervals and confidence levels. Furthermore, it could result in leakage between the test and the training set.
It is crucial to choose the MA method that is compatible with your trading style. An SMA is the best option for markets that are trending, whereas an EMA is more reactive. (It eliminates the lag of the SMA because it assigns priority to the most recent data.) Additionally, the parameter of the MA must be selected with care based on whether you are looking for a short-term or long-term trend (the 200 EMA is suitable for more time).
In the end, it is essential to make sure you check your work before making it available for review. This is especially important when working with large amounts of data as errors could be more likely to occur. It is also possible to have your supervisor or colleague review your work to help identify any mistakes you might have missed.
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