07 Jul

These forecasts are really amazing. The ability to forecast the trend of stocks/commodities/FOREX using an algorithm is truly a miracle.

However, this algo is not 100% correct all the time for all price instruments. It happens that there are gaps and incorrect timing forecasts. Although this happens rarely, it must be brought to the front, as a warning to always use the risk management tools such as stop-loss and position sizing to reduce risks.

Here is an example of such a case. COCOA forecast from May 1 2020. 

The forecast showed an uptrend from May 1 till June 25. However, the price fell on June 8 before it reaches the expected top on June 25. Then the price did a second attempt to go higher and changed direction on June 25 as predicted.

The two weeks between June 8 and June 25 resulted and incorrect timing forecast that should be mitigated using stop-loss.


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