Calculating the estimates

Hello friends ,

Lets discuss in this thread on how to calculate estimates of each new datas releasing everyday .

For example :

GDP
Inflation expectations
Unemployment estimates

WE will be discussing forex as well as stocks . We need to calculate before the news comes , at forexfactory we can see they publish forecast . But does any one here knows how the value comes ?

Am sure experts knows abt this thing , anyone who knows can come forward and teach peoples .

I never seen this kind of thread in forexfactory , so lets start the jet first

Thanks

The "forecast" is just an average of different economists' predictions of what the data will turn out to be.

Different economists will have differing methods of arriving at such forecasts. The methods range from the bone-headed (e.g. just looking at data trends and blindly extrapolating, similar to technical analysis in fact), to the more methodical (e.g. actually surveying the same data set as the original source and either improving the set or improving the analysis).

(The last para is just my observation.)

In any case, the economists will most certainly have resources that will probably be beyond the reach of most retail traders and the forecasting process will most likely be too time-consuming for traders to carry out.

I fear trying to "calculate" the estimates (as you put it) may not be a fruitful exercise.

But don't just take my word for it. You are encouraged to try.

its quite interesting to study these releases.most dont really have that much effect on the whole,but collectivly they build sentiment.

the interest to me is the way in which very bad numbers are released.ive noticed this often during these difficult times.just recently we saw the prime minister of the uk,pre empting bad gdp growth ,smoothing the eventual release.pre pricing for the markets.which is far less damaging.

europe is rife with maniplative pre release of important bad news.its corrupt through from goverment and the puppet banking system.eventually they will have no top level bankers to sack and then they will start on them selves.

just to add to my last point,with so much pre leakage ,and pre pricing,

taking the average from the swings on lower time frames wouldnt put you to far away from the mean.

Thanks very much for coming forward and replying to this thread .

Well as u guys told economist have resources to take those , am sure if we retail traders try it we can surely calculate it .

We just need a person who known little knowledge abt it so that we can develop .

Please come forward and explain things if you people know.

Thanks

For an insight as to how professional economists formulate their "forecasts", you can read about how the official stats are calculated in this book:

"The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities"

All pro economists do is essentially make a stab at a number and say, "that's my forecast for the statistic that's about to be released."

That's all it is. A guess.

It still doesn't help a trader avoid common related pitfalls such as when markets do not react as expected to released data or how markets move too little or too much in response.

Thanks buddy, i searched in google regarding the economics forum , but cant find any , if u find any let me know .

Thanks guys

The book just says at each news how it works etc, it never says how they calculate it

The book shows how the official stats are collected and presented by the primary sources (i.e. the government, the central bank etc etc), and how the market reacts to it and by how much.

Some private sector professional economists (from whom the FORECASTS are collected and averaged) use the same methodology as the primary sources in collecting the data. Obviously they don't have access to the same sample data as the government, so they will approximate with samplings of their own.

As for how to "calculate", in most cases, the statistics are just simple summing up of data, averaging of data, calculating percent of change from a previous period, applying an index etc etc. I think once you have a sample set, any first year college-level econometrics or statistics textbook should set you straight.

Some other pro economists just tack on a trendline and project trends that way instead. Not very scientific.

All in all, it's good to know how the forecasts are "calculated", I'm not saying it isn't good. But at the end of the day, all the forecasting work has already been done by these so-called professionals. We might as well spend more time learning when to pull the trigger. In the heat of battle, I don't think we have time to do anything else.

How can I benefit from the normal distribution mql file given in the Mathematics in Trading: How to Estimate Trade Results article http://articles.mql4.com/471/ ?Help appreciated.