Best indicators ?????????????
- Thread starter Humpy
- Start date
I have traded long enuf to know that "predictive analytics" is a flowery term for "to guess". As a result, I do not have a need for that. While the market is not moving, I cast a net based on some rather elementary maths. When enuf of the market moves into the net, I bring the net to shore "my trading account".
Wash, rinse, repeat.
I use a concept that I call "percentage compression". It requires one bar of data.
KISS.
Predictive analytics is a variation on a number of terms that overlay or are implementations of the similar methods: data mining, data modeling, computational intelligence, business intelligence. It's the opposite of a guess in the sense that it is entirely machine based, no human involved in the computation or creation just he design/setup.
Successful uses include CRM, industrial quality control, voice print identification of suspect cell phone traffic by the agencies that listen to our phone calls, oil exploration and of course market timing.
The methods used in the voice print work, specifically the pattern classification paradigm called LandMark is directly applicable (with translation) to market wave patterns...... but like a said no human judgment or guesswork involved.
Happy to help you understand this technology.
Jerry
Jerry,
In a non-linear/asymmetric system, the only thing a computer can do is make a sophisticated guess on what data is available at the time.
Your supreme confidence reminds of a company called LTCM.
There is a great documentary about this called, When Genius Failed. It starts out with a fellow hand drawing charts and trading against intellectual financial giants.
At the end of the show, he was still there.
They were not.
Not really.
The software application looks at history, be it market prices time series, pervious acoustic signals from geological formations that have produced oil or failed to produce it or previously intercepted voice patterns of known terrorist suspect then identifies patterns and relationships that are currently unknown and unseen by a human reviewer and learns them. If they hold up on unseen data not subject to the same learning and discovery process and on future unknown data (works in the real world), then it's of value as something unknown has been discovered and verified.
Attached is an example of predictive analytics applied to FOREX.
Goal: trend detection.
Data Structure: modified Landmark
Analytic tool: neural network
Market: Forex EUR/JPY hourly bars
Training Set 24,000 bars
Stable out of Sample Performance: about 4,000 bars
Retraining time: about a week.
As you can see it doesnât catch the exact trend turn point but it does get signals bars sooner than conventional linear rule systems, which havce to wait for the price to move as they arenât pedictive.
The other drawback is as you mentioned in non-linear/asymmetric systems about 55% of the time there is nothing to detect as the market is chaotic or at least the analytics process could not learn a pattern structure. So sometimes it doesn't trade for a few days.
Jerry
Poor old Jack believes he was hired by the UN and several countries to investigate claims of global warming at Antarctica as he told us in this thread:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=161373&perpage=6&pagenumber=14
He must be the only professional adventurer that never leaves his computer
http://www.elitetrader.com/vb/showthread.php?s=&threadid=161373&perpage=6&pagenumber=14
Quote from jack hershey:
You may not be a professional explorer hired by various nations or the united Nations. I was and there was a purpose. Long range planning primarily.
He must be the only professional adventurer that never leaves his computer
OP
Just suppose every trader in the world responded to your question â and now you had all this âvaluableâ information
What would you do with it?
How would it help you trade better?
Both rhetorical questions btw Sir
However since you asked â my favorite indicators are
Price
My eyes
Everything else is pretty much optional â imho of course
fwiw - I've always found KISS is best for trading
Regards
RN