The influence of trend strength on directional probabilistic currency predictions
Thomson, M. E.
Pollock, A. C.
Please cite this item using this persistent URLhttp://hdl.handle.net/11693/13438
International Journal of Forecasting
- Department of Management 
An experiment is reported which compares the judgmental forecasting performance of experts and novices using simulated currency series with differing trend strengths. Analyses of directional probability forecasts reveal: (1) significant effects of trend strength on all aspects of predictive performance being studied, with evidence for the hard-easy effect where overconfidence is exhibited on weak (i.e., more difficult) trends. while underconfidence is shown on strong (i.e., less difficult) trends; (2) lower performance of experts on relative accuracy and profitability measures. reflecting experts' resistance to strong trends; (3) better overall performance on negative trends; and (4) superior performance of composite forecasts. Possible explanations are offered for these results and future research directions are outlined. (C) 2001 International Institute of Forecasters. Published by Elsevier Science B.V. All rights reserved.
Thomson, M. E., Önkal-Atay, D., Pollock, A. C., & Macaulay, A. (2003). The influence of trend strength on directional probabilistic currency predictions. International Journal of Forecasting, 19(2), 241-256.