Trending Methodology

Trending Methodology

Introduction

A broad range of quantitative and qualitative techniques and methodological approaches have been applied in the area of future studies, one of which is forecasting. Forecasting is often defined as the estimation of the value of a variable (or set of variables) at some future point in time. The terms forecast, prediction, projection, and prognosis are typically used interchangeably to describe forecasting. Risk and uncertainty are also central to forecasting and prediction.

Forecasting exercises are often carried out as an aid to decision making and in planning the future. They typically work on the premise that if we can predict what the future will be like, we can modify our behavior now to be better positioned for the future than we otherwise would have been. Examples of applications for forecasting include inventory control/production planning, investment policy, and economic policy.

Discussion

Trending Methodology

Trending Methodology is a snapshot of the data collected over a given time (end of month, end of year), compared with the corresponding period data of last years. Trending methodology is a way through which a historical data is analyzed and a trend is figured out in order to predict the future. For example, if the data we are analyzing is about the turnover of employees, trend analysis or trending methodology allows us to understand how it evolved in a period of time in order to see if there were peaks in any particular season. Understanding trends is an essential ingredient in the development of an accurate forecast. Trending is not predicted, but it comes out through past data analysis. It embodies the changing demand in the long term.

Trending is a common method used by the managements of various companies in order to forecast demand. The concept of trend is also not unique to the financial markets. In a general ...