Chapter 15

Avoiding Analysis Traps

In This Chapter

arrow Examining your data

arrow Exploring your data potential problems

arrow Dealing with outliers and fitting data to a curve

arrow Evaluating your technical analysis

arrow Describing the limitations of a predictive model

In the quest for building a predictive model, you’ll need to make decisions every step of the way — and some decisions are harder than others. Informed decisions — and an awareness of the common mistakes that most analysts make while building their predictive models — give you your best shot at success.

This chapter offers insights on the issues that could arise when you embark on a journey toward the effective use of predictive analytics. At the outset, consider this general definition:

A predictive model is a system that can predict the next possible outcome, and assign a realistic probability to that outcome.

As you build your predictive model, you’re likely to run into problems in two areas — (1) the data and (2) the analysis. This chapter ...

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