What is Predictive Analytics?

 Financial market forecasting is an incredibly important activity. In fact, the specifics of speculative trading is to predict the approximate quote in the future and use this information for their own purposes. Of course, we are not gods. Therefore, we cannot have accurate information about how the market will develop in the future.

Many factors we can't predict simply because of a lack of knowledge. Predictive Analytics will help you to some extent approach the vision of the future.
What is predictive Analytics?
Why do I need predictive Analytics?

Many believe that it helps to see the future. Not exactly. The fact is that to make an accurate prediction, you need to have information, and there can be a million factors that can lead to a certain economic event. Even the most experienced traders don't know about many of them. Therefore, predictive Analytics does not set a goal to predict. She just wants to know if this outcome is possible in the future, or not. In principle, this opens up enough prospects for the trader, and among them are the following:

The ability to understand the likely development of an unfavorable situation in Forex.
Prevent bad results based on the data obtained.
Reduce the trading volume based on new information, or increase it if the forecast is favorable.

It is very important to consider one thing: the cost of Analytics should be less than the possible losses from failure. In this case, we can talk about the success of this approach.
What to consider when compiling

Slump. This is understood as a loss, which is expressed as a percentage of the total amount of funds that are on the account. In other words, if the drawdown is 10% of the $ 100 Deposit, then the trader's account remains $ 90. If there is nothing left, then we are talking about a 100% drawdown.

The recovery factor. It shows how much a person can lose to get a certain amount of profit. To calculate it, you need to divide the revenue by the maximum drawdown. The higher this parameter, the better. It is recommended to trade with a recovery factor of 3 or more.

Mathematical expectation. This is a numerical indicator that shows how profitable your deal will be. If it is positive, then you will probably have an income. If it is negative, it is better not to trade.

Despite the fact that predictive Analytics can take into account positive trends to some extent, it is still focused on anticipating undesirable consequences and preventing them. And the positive can then be deduced.

Thus, we have figured out an effective technique that will help you avoid huge losses in the future. Provided that you master it perfectly, of course. Remember that you should never stop developing. Otherwise, more professional traders will overtake you, even if you were three heads ahead of them before. I hope that you will use this technique and constantly improve in it, using new techniques, including those that you have invented.