Question

From the choice of a simple moving average, weighted moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why?

Short answer

Answer

The weighted moving average is considered the most accurate forecasting technique as it is used to overcome the strong effect of extreme values.

Step-by-step solution

Weighted moving average

The weighted moving average is atechnical indicator that traders use to generate trade direction and make a buy or sell decision.

Weighted moving average is the most accurate forecasting technique than the simple moving average, exponential smoothing, and linear regression analysis

Out of the four choices (simple moving average, weighted moving average, exponential smoothing, and regression analysis), the weighted moving average is the most accurate technique of forecasting because specific weights will be placed by their importance. The other methods make assumptions, like an average, straight line, or exponential curve. The weighted average could also be modified to any form.