A note on diagrams for turning‐point diagnostics

A new diagram for discriminating a forecasting technique's history with respect to the two types of turning‐point errors, missed turns and false signals is presented. This diagram extends Theil's original prediction‐realization (P‐R) presentation so that each of the four quadrants and the axes locates a distinct type of forecasting error or correct forecast, thus reducing much of the former ambiguity. This improvement is accomplished without the loss of any information.