Autocorrelation Price Forecasting [The Quant Science]Discover how to predict future price movements using autocorrelation and linear regression models to identify potential trading opportunities.
An advanced model to predict future price movements using autocorrelation and linear regression. This script helps identify recurring market cycles and calculates potential gains, with clear visual signals for quick and informed decisions.
Main function
This script leverages an autocorrelation model to estimate the future price of an asset based on historical price relationships. It also integrates linear regression on percentage returns to provide more accurate predictions of price movements.
Insights types
1) Red label on a green candle: Bearish forecast and swing trading opportunity.
2) Red label on a red candle: Bearish forecast and trend-following opportunity.
3) Green label on a red candle: Bullish forecast and swing trading opportunity.
4) Green label on a green candle: Bullish forecast and trend-following opportunity.
IMPORTANT!
The indicator displays a future price forecast. When negative, it estimates a future price drop.
When positive, it estimates a future price increase.
Key Features
Customizable inputs
Analysis Length: number of historical bars used for autocorrelation calculation. Adjustable between 1 and 200.
Forecast Colors: customize colors for bullish and bearish signals.
Visual insights
Labels: hypothetical gains or losses are displayed as labels above or below the bars.
Dynamic coloring: bullish (green) and bearish (red) signals are highlighted directly on the chart.
Forecast line: A continuous line is plotted to represent the estimated future price values.
Practical applications
Short-term Trading: identify repetitive market cycles to anticipate future movements.
Visual Decision-making: colored signals and labels make it easier to visualize potential profit or loss for each trade.
Advanced Customization: adjust the data length and colors to tailor the indicator to your strategies.
Limitations
Prediction price models have some limitations. Trading decisions should be made with caution, considering additional market factors and risk management strategies.
Priceforecast
Price Prediction With Rolling Volatility [TradeDots]The "Price Prediction With Rolling Volatility" is a trading indicator that estimates future price ranges based on the volatility of price movements within a user-defined rolling window.
HOW DOES IT WORK
This indicator utilizes 3 types of user-provided data to conduct its calculations: the length of the rolling window, the number of bars projecting into the future, and a maximum of three sets of standard deviations.
Firstly, the rolling window. The algorithm amasses close prices from the number of bars determined by the value in the rolling window, aggregating them into an array. It then calculates their standard deviations in order to forecast the prospective minimum and maximum price values.
Subsequently, a loop is initiated running into the number of bars into the future, as dictated by the second parameter, to calculate the maximum price change in both the positive and negative direction.
The third parameter introduces a series of standard deviation values into the forecasting model, enabling users to dictate the volatility or confidence level of the results. A larger standard deviation correlates with a wider predicted range, thereby enhancing the probability factor.
APPLICATION
The purpose of the indicator is to provide traders with an understanding of the potential future movement of the price, demarcating maximum and minimum expected outcomes. For instance, if an asset demonstrates a substantial spike beyond the forecasted range, there's a significantly high probability of that price being rejected and reversed.
However, this indicator should not be the sole basis for your trading decisions. The range merely reflects the volatility within the rolling window and may overlook significant historical price movements. As with any trading strategies, synergize this with other indicators for a more comprehensive and reliable analysis.
Note: In instances where the number of predicted bars is exceedingly high, the lines may become scattered, presumably due to inherent limitations on the TradingView platform. Consequently, when applying three SD in your indicator, it is advised to limit the predicted bars to fewer than 80.
RISK DISCLAIMER
Trading entails substantial risk, and most day traders incur losses. All content, tools, scripts, articles, and education provided by TradeDots serve purely informational and educational purposes. Past performances are not definitive predictors of future results.
Quantitative Price Forecasting - The Quant ScienceThis script is a quantitative price forecasting indicator that forecasts price changes for a given asset.
The model aims to forecast future prices by analyzing past data within a selected time period. Mathematical probability is used to calculate whether starting from time X can lead to reaching prices Y1 and Y2. In this context, X represents the current selected time period, Y1 represents the selected percentage decrease, and Y2 represents the selected percentage increase. The probabilities are estimated using the simple average.
The simple average is displayed on the chart, showing in red the periods where the price is below the average and in green the periods where the price is above the average.
This powerful tool not only provides forecasts of future prices but also calculates the distribution of variations around the average. It then takes this information and creates an estimate of the average price variation around the simple average.
Using a mean-reverting logic, buying and selling opportunities are highlighted.
We recommend turning off the display of bars on your chart for a better experience when using this indicator.
Unlock the full potential of your trading strategy with our powerful indicator. By analyzing past price data, it provides accurate forecasts and calculates the probability of reaching specific price targets. Its mean-reverting logic highlights buying and selling opportunities, while the simple moving average displayed on the chart shows periods where the price is above or below the average. Additionally, it estimates the average variation of price around the simple average, giving you valuable insights into price movements. Don't miss out on this valuable tool that can take your trading to the next level