Smoothing trend line
It was incredibly clear to me that the smoothed lines were distorting the data, not much, but distorting it nonetheless. The first chart is obviously the binary options schedule lines.
Nice smoothing trend line pretty, I agree. I added the gridlines, though I would never do this if I were smoothing trend line this for real, so that you can see where the points truly intersect.
Maths Tutorial: Smoothing Time Series Data (statistics)
In both of these instances, and many more across the chart, the lines go beyond where they should in an attempt to make the chart nice and smooth.
If I were to look at this quickly, I might think that my sales increased from July to Augustbut in fact, there was a slight decrease. In order for the line to connect smoothly to Septemberthe line has to go around August Imagine how distorted their data could look.
Contrast the smoothed line chart to this standard line chart. You now easily see that sales decreased from July to August The smoothed lines lead you to believe that there is more data being connected.
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Now that dip after August really stands out. Jon Peltier of the Peltier Tech Blog sums it up best in his post about the charts to choose and avoid in Excel : Smoothed lines are abused.
If you are plotting measured data, the only valid connecting curve between points is a straight line or a line which is fitted to a function that comes from a physical model of the data.
A smoothed curve implies that the data goes places where it has not been measured. My advise?
Email You are conducting an exploratory analysis of time-series data. To make sure you have the best picture of your data, you'll want to separate long-trends and seasonal changes from the random fluctuations. In this article, we'll describe some of the time smoothers commonly used to help you do this. These include both global methods, which involve fitting a regression over the whole time series; and more flexible local methods, where we relax the constraint by a single parametric function.
NEVER use smoothed lines. The ONLY possible outcome is misinterpretation. This is very true.
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