Forecast parameters: signal, target, probability, risk
Core Forecast Components
Every QuantWave forecast contains four essential parameters that provide complete trade scenarios:
| Parameter | Purpose | Values/Range | How to Use |
|---|---|---|---|
| Signal | Recommended trading direction | BUY / SELL / HOLD | Determines position direction |
| Target | Expected price destination | Specific price level with % gain | Profit-taking reference |
| Probability | Likelihood of reaching target | 50-95% (Low/Medium/High) | Position sizing factor |
| Risk | Potential downside exposure | Low/Medium/High with stop level | Risk management guide |
Detailed Parameter Explanation
1. Signal (Directional Bias)
- BUY: Expecting upward price movement
- Best for long positions
- Typically appears in uptrends
- SELL: Expecting downward price movement
- Best for short positions
- Typically appears in downtrends
- HOLD: Neutral/no clear edge
- Suggests waiting for better setup
2. Target (Price Objective)
- Always includes:
- Specific price level
- Percentage gain from entry
- Calculated using:
- Support/resistance levels
- Fibonacci extensions
- Wave measurements
3. Probability (Confidence Level)
- Low (50-65%): Higher risk trades
- Smaller position recommended
- Medium (66-79%): Balanced opportunities
- Normal position size
- High (80%+): Highest conviction
- Can consider larger positions
4. Risk (Downside Potential)
- Low Risk: Tight stop-loss, high reward/ratio
- Medium Risk: Balanced risk/reward
- High Risk: Wider stops, speculative
- Always includes:
- Stop-loss price
- Maximum acceptable loss %
Parameter Interdependence
These parameters work together:
- High probability + Low risk = Best opportunities
- Medium probability + Medium risk = Standard trades
- Low probability + High risk = Avoid or smallest size
Practical Usage Example
Forecast: "BUY TSLA $180.50, Target $198.55 (+10%), Probability 72% (Medium), Risk Medium (Stop $174.25 -3.5%)"
Interpretation:
- Enter long position near $180.50
- Target 10% gain at $198.55
- 72% chance of success - normal position
- 3.5% max risk with stop at $174.25
Understanding these four parameters allows traders to properly evaluate and act on QuantWave forecasts while maintaining disciplined risk management.