The influence of trend strength on directional probabilistic currency predictions

Mary E. Thomson*, Dilek Önkal-Atay, Andrew C. Pollock, Alex Macaulay

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


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.

Original languageEnglish
Pages (from-to)241-256
Number of pages16
JournalInternational Journal of Forecasting
Issue number2
Early online date22 Nov 2002
Publication statusPublished - Apr 2003
Externally publishedYes


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