Validating forecasts within your system
The Forecast Verification Process
Systematic validation ensures QuantWave forecasts align with your trading methodology before execution.
Key Validation Steps
1. Technical Alignment Check
- Confirm price action matches forecast direction
- Verify support/resistance levels
- Check volume and momentum indicators
2. Fundamental Consistency
- Earnings dates and events calendar
- Sector/industry trends
- Macroeconomic environment
3. System Compatibility
| Your System Component | Forecast Match Check |
|---|---|
| Timeframe | Matches your trading horizon |
| Risk Parameters | Fits your position sizing rules |
| Asset Class | Within your approved universe |
QuantWave Validation Tools
1. Backtesting Module
- Test forecast logic on historical data
- Compare against your strategy results
- Identify optimal entry/exit tweaks
2. Live Simulation Mode
- Paper trade forecasts for 2-4 weeks
- Track hit rate and risk/reward
- Adjust parameters before live trading
Validation Framework
The 5-Point Checklist
- Direction: Confirms your analysis
- Probability: Meets your minimum threshold
- Risk/Reward: Matches your ratio requirements
- Liquidity: Sufficient for your size
- Correlation: Complements existing positions
Performance Tracking
- Maintain validation journal
- Tag trades by validation score
- Review accuracy monthly
- Adjust criteria quarterly
Common Validation Errors
- Ignoring conflicting technicals
- Overriding high-probability signals
- Validating selectively (confirmation bias)
- Skipping paper trading phase
Rigorous validation transforms QuantWave forecasts from generic signals into personalized high-probability setups. By systematically verifying each forecast against your trading system's requirements, you maintain consistency while leveraging quantitative edge.