polynomial trending

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Orion

I'm trying to discover the default order no. for polynomial trending in Excel
97 and 2000 and if possible, why they chose order no. 4 as the default in
Excel 2003? Can anyone help?
 
Do you mean the value in the window when you use Add Trendline and select
Polynomial.
In my versions of XL2003 and XL2007 this is 2. I seem to recall it was
always 2 in versions from 1997. I have never seen 4 as the 'default'
best wishes
 
Hi Bernard,

Thank you so much for answering this question. I see now that what you are
saying is true. I have both 03 and 07 versions.

A couple of questions:

How do you determine what order no. to select for a polynomial trend line?
The Excel Help text says choose an order that is one greater than the no. of
peaks and valleys. I'm not quite sure what constitutes a peak and a valley.
If the data points are 70, 75, 85, 75, 83, 92, 78, 73. Is that 2 peaks and 2
valleys? So the order no. to select is 5? Or?

What is your opinion about the reliability of polynomial trending for
forecasting?

Thank you so much for your response. Best wishes.
 
Smartin,

Thank you so much for your insights!

As I am still learning about polynomial trending and its value, they are
helpful.

So, let me see if I understand what you are saying. Let's say, for instance,
we are talking about fluctuations in gas prices at the pump over the last x
number of years, and we see how they've gone up and down and up and down and
now are waaaaayyyy down (hallelujah! I paid $2.19 yesterday, a price I never
thought I'd see again in this lifetime), but we cannot predict future prices
based on trending of the data alone without knowing something about the
underlying context and 'reasons' for the fluctuations?

So, how is trending used then for predictive purposes? Does it merely state
probabilities of future performance based on previous fluctuations? If so,
what parameter reveals this probability (is it the R-value?)? So, using our
example above, could we plot a trend line that gives a probability, based on
the data, of gas prices going up or down, for instance?

Thank you, anyone, for enlightening me on this subject. Are there any
statisticians in our midst on this board?

Orion
 
Thank you so much for this discussion! This is very helpful. I really
appreciate you taking your time to explain this. It makes sense.

If there are any other insights anyone else on this board has to offer
regarding the reliability of using polynomial trending for forecasting that
would be greatly appreciated. Especially I am interested in whether there is
a number (calculation?) that shows, given a set of data, what the probability
is that it will continue on an upward or downward trend. Then we could say,
given the past circumstances, and aside from unusual (abnormal)
circumstances, there is x% probability that this trend will continue (up or
down).

Thank you so much for any insights.

Orion
 
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