How do I determine which order to use in a polynomial trendline?

  • Thread starter Thread starter Guest
  • Start date Start date
G

Guest

I have two years worth of monthly revenue data. I'd like to forecast the next
year based on this data. Should I use the polynomial trendline? If so, which
order do I need to use?
 
Most business have a strong seasonal component which would typically involve
a Fourier analysis. After removing the seasonal component, you could look
for a systematic trend, which might involve a low order polynomial.

When fitting polynomials without a theoretical justification for the model,
beware of overfitting the data.

Jerry
 
Back
Top