Trend extrapolation - The individual components are not analyzed, only the trend is extrapolated into the future. One possibility is graphical trend extrapolation. A trend line is drawn through points from the past.
This method is imprecise and subject to subjective influence. That is why analytical methods are preferred. It is determined graphically whether the trend is linear, exponential or logistic; then the trend function is determined. In addition to determining trends through graphical extrapolation, there is also the method of moving averages and exponential smoothing.
As a time series analysis, trend extrapolation is the continuation of underlying series in the future. It is assumed that the laws of the past will continue in the future. This is only true as long as there are no dynamic developments. A distinction must be made between:
That graphic process, also known as the freehand method. It is a graphic extension of the development determined from a graph with reference to the future. Because of its low accuracy, this method should only be used for short to medium-term forecasts.
That mathematical procedureswhich uses the least squares method. A best-fit straight line y = a + bx is determined in such a way that the sum of the squares of deviation from the straight line is minimal