Double Exponential Smoothing Indicator

Double exponential smoothing - also known as Holt exponential smoothing is a refinement of the popular simple exponential smoothing model with an additional trending component. Double exponential smoothing model for equity instruments works best with periods where there are trends or seasonality.Investors can use prediction functions to forecast historical stock prices and determine the direction of financial instruments such as stocks, funds, or ETFs's future trends based on various well-known forecasting models. However, exclusively looking at the historical price movement is usually misleading. Macroaxis recommends to always use this module together with analysis of historical fundamentals such as revenue growth or operating cash flow patterns. Check out Investing Opportunities.

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Double exponential smoothing - also known as Holt exponential smoothing is a refinement of the popular simple exponential smoothing model with an additional trending component. Double exponential smoothing model for equity instruments works best with periods where there are trends or seasonality.
When price prices exhibit either an increasing or decreasing trend over time, simple exponential smoothing forecasts tend to lag behind observations. Double exponential smoothing is designed to address this type of data series by taking into account any price trend in the prices. So in double exponential smoothing past observations are given exponentially smaller weights as the observations get older. In other words, recent equity instruments observations are given relatively more weight in forecasting than the older observations.

Double Exponential Smoothing In A Nutshell

Smoothing is a term used when we are trying to turn the data into smoother trends. If you note on some indicators, they move in a wild manner and are choppy. The ideal indicator moves smoothly, giving use a potentially more accurate reading. If you saw an RSI that moved quickly, it may deter you from using that tool because you may not have the ability to form an opinion quick enough. However, if you are day trading, you may decide the quick movements are what you need.

If you have not done so or are new to exponential smoothing, check out simple exponential smoothing. It will give you a better understanding of double exponential smoothing and what the differences may be between the two. One of the main differences between the two is that simple exponential smoothing tends to lack when the market is trending.

Closer Look at Double Exponential Smoothing

You can smooth any amount of data into double, triple, and so on. The equation that goes into the double exponential smoothing can be difficult and off putting. However, it is important to understand the basic information that is taken into account as you want to understand what makes it move. It may not be necessary to understand the full equation however unless you are building a proprietary instrument. MacroAxis offers many different tools and researching aids that you can narrow in on exactly what fits your needs best. Throw in numbers and begin testing out certain aspects.

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Macroaxis is not a registered investment advisor or broker/dealer. All investments, including stocks, funds, ETFs, or cryptocurrencies, are speculative and involve substantial risk of loss. We encourage our investors to invest carefully. Much of our information is derived directly from data published by companies or submitted to governmental agencies which we believe are reliable, but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way warrant or guarantee the success of any action you take in reliance on our statements or recommendations. Also, note that past performance is not necessarily indicative of future results. All investments carry risk, and all investment decisions of an individual remain the responsibility of that individual. There is no guarantee that systems, indicators, or signals will result in profits or that they will not result in losses. All investors are advised to fully understand all risks associated with any investing they choose to do. Hypothetical or simulated performance is not indicative of future results. We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown because hypothetical or simulated performance is not necessarily indicative of future results. For more information please visit our terms and condition page