In order to test the accuracy of our forecasting, we designed a special method
which allows us to calculate level of prediction ACCURACY (go to
Forecasting Basics to learn about forecasting accuracy).
The main reason for calculating ACCURACY is to scientifically analyze the
quality of prediction. FORECASTING ACCURACY is an actual accumulated record of
statistical difference of the forecasting price on a trade and the actual fill
price.
For instance: "open" quotes hypothetic company XYZ was predicted at $20.50, but
actual opening was $20.00 in the same trading day. The ACCURACY of the "open"
price prediction calculates as 100–abs(20-20.50)/20, and will be equal 97.5%.
ACCURACY is calculated for open, close, low, high and average quotes, for every
day of trade, going back 50 days (weeks) from the last day of trade, to the
same trading day of the actual historical quotes. The next step is to add all
50 historical days (weeks) "open" prices ACCURACY together, statistically
forming a single number AVG ACCURACY. Finally, the program will calculate AVG
ACCURACY for "close, high, low and average" the same manner with the investor
being able to view the results printed on the last row of the forecasting
table.
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