Analyzing forecast parameters
Decoding the Forecast Components
Each QuantWave forecast contains multiple data points that together create a complete trading scenario when properly interpreted.
Core Parameter Analysis
1. Directional Signals
- BUY/LONG: Bullish expectation with defined entry zone
- SELL/SHORT: Bearish expectation with resistance levels
- HOLD/NEUTRAL: No clear edge or transition period
2. Confidence Metrics
| Probability Range | Interpretation | Suggested Action |
|---|---|---|
| 80-100% | High conviction | Full position size |
| 65-79% | Moderate confidence | Normal position |
| 50-64% | Low confidence | Reduced size or pass |
3. Price Targets
- Primary Target: Minimum expected move (80% probability)
- Secondary Target: Extended move (50% probability)
- Invalidation Level: Point that voids the thesis
Advanced Parameter Relationships
Risk/Reward Matrix
- 1:1 = Minimum acceptable ratio
- 1:2 = Standard QuantWave expectation
- 1:3+ = High quality setups
Time/Probability Correlation
- Short-term (1-5 days): Higher probability (70%+)
- Medium-term (1-4 weeks): Moderate probability (60-70%)
- Long-term (1-6 months): Wider probability range (50-65%)
QuantWave Analysis Tools
| Tool | Parameter Insight |
|---|---|
| Scenario Explorer | Visualizes probability distributions |
| Parameter Backtester | Tests historical accuracy of similar setups |
| Risk Calculator | Auto-computes position sizes |
Practical Analysis Framework
- Verify probability aligns with risk/reward
- Check time horizon matches your strategy
- Confirm sector/asset is in your universe
- Assess liquidity meets your requirements
- Review correlation with existing positions
Common Analysis Mistakes
- Focusing only on direction ignoring probability
- Overlooking time horizon mismatches
- Not checking recent parameter accuracy
- Ignoring changing volatility conditions
Parameter Tracking System
- Record forecasted vs. actual outcomes
- Track accuracy by parameter combinations
- Adjust interpretation based on results
Mastering parameter analysis transforms raw forecasts into high-probability trading plans. By understanding how direction, probability, risk and time interact, you can selectively execute only the highest-quality QuantWave signals that match your strategic objectives.