Mechanical vs Neural trading systems

TSGannGalt · Nov 14, 2007

It's simpler...

Most people just stick a NN or Computer Learning logic and lose control over it.

It's a necessity for a system developer to have clarity over what's going on with their trades.

Blindly using NN or any tool without any understanding / control is only increasing your risk of trading.

ronblack · Nov 14, 2007

Quote from pandabear:

1. Do consistently profitable mechanical trading systems exists? (I am sure they do but does anyone here run one?)
2. What more profitable for the longer term? Mechanical or a neural system?

1. Yes

2. "Neural system" is another term for curve fitting when it applies to market data. The biggest problem is overtraning.

Ron

lindq · Nov 14, 2007

Quote from pandabear:

What I offer in return is someone whose passionate about the financial markets and someone whose known to offer a different but valid point of view every know and then.

LOL. Not the most powerful offer I've ever heard.

Don't wait by the phone.

lindq · Nov 14, 2007

Quote from pandabear:

What I offer in return is someone whose passionate about the financial markets and someone whose known to offer a different but valid point of view every know and then.

LOL. Not the most powerful offer I've ever heard.

Don't wait by the phone.

tetramorium · Nov 14, 2007

Quote from lindq:

Don't wait by the phone.

Where should he wait?

pandabear · Nov 25, 2007

Thanks for a lot of these comments! Very helpful indeed.

A couple of followup questions:

- Most folks who are running profitable mechanical trading systems - Are you running intraday or swing systems? Are you running them on SPY, DIA, IWM's or looking on individual stocks?

Thanks

TradEStar · Nov 25, 2007

Quote from rcanfiel:

Automated trading is simply a manner of automating a bad strategy, so you can lose money more rapidly. Neural trading is a manner of forming a Rube Goldberg machine that somehow almost never works in the real world. Mechanical trading means nothing unless you have a serious edge.

Other than that...

Sure, that is why all the volume keeps moving more and more to Automated Systems, because everyone is just losing in all these systems....LOL!!!!!!!!!!

Remember, just because you can't build your own bridge across the river does not mean others can't.

condorll · Nov 25, 2007

Quote from pandabear:

Thanks for a lot of these comments! Very helpful indeed.

A couple of followup questions:

- Most folks who are running profitable mechanical trading systems - Are you running intraday or swing systems? Are you running them on SPY, DIA, IWM's or looking on individual stocks?

Thanks

Swing.
SPY, DIA, and individual stocks.

Running Mechanical NN systems profitably.

condorll · Nov 25, 2007

Just another comment.

It would not surprise me if the Naysayers here on mechanical trading systems or NN systems or mechanical systems enhanced with NN's have never actually worked with them.

nitro · Nov 25, 2007

Agreed.

nitro

Quote from Murray Ruggiero:

People look at Neural networks wrong. They are a powerful tool to improve a trading strategy. They should not be the core of the strategy. One example would be developing a system which uses MACD. If you find a profitable and robust strategy you could use a neural network to predict the MACD a few bars in the future and then replace the original one.

This approach is the best way I have found to use neural networks as a component in a strategy and not the strategy themselves.