Despite its many advantages ma analysis isn’t easy to master. Many mistakes occur in the process, resulting in incorrect results that could have devastating consequences. Recognizing these mistakes and avoiding them is essential to fully harness the power of data-driven decision-making. The majority of these errors result from omissions or misinterpretations which can be easily rectified by setting clear goals and promoting accuracy over speed.
Another mistake that is common is to assume that a variable is generally distributed when it’s not. This can lead to models being overor under-fitted, and thereby compromising confidence levels and prediction intervals. Additionally, it can result in leakage between the test and the training set.
It is crucial to choose the MA method that fits your trading style. An SMA is best for trending markets, while an EMA is more reactive. (It removes the lag in the SMA because it assigns priority to the most recent data.) In addition, the parameters of the MA must be selected with care based on whether or not you are seeking the trend to be long-term or short-term (the 200 EMA is a good choice for a longer timeframe).
It is important to double-check the accuracy of your work prior to submitting it to be reviewed. This is especially true when dealing with large amounts of data, as errors are more likely to occur. You can also have your supervisor or a colleague review your work to identify any errors you might have missed.