In this issue:
I. NeuroShell Trader Professional wins again!
II. Real estate models – location, location, location
III. The Formula Detective(SM) Data Mining Service
IV. NeuroShell and FX currencies
V. Make sure you continue to get the news
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I. NeuroShell Trader Professional wins again!
Technical Analysis of Stocks & Commodities magazine just announced the NeuroShell Trader Professional was rated #1 FOR THE SECOND YEAR IN A ROW for artificial intelligence trading software in the annual Readers’ Choice Awards competition. The awards will be announced in the Bonus Issue of the magazine and were the results of readers voting on the magazine’s web site. We want to sincerely thank you, our users, for getting out to vote for us again this year.
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II. Real estate models – location, location, location
The answer to the following question applies not just to real estate applications, but probably to most applications of NeuroShell Predictor and NeuroShell Classifier involving geography:
Q. I am building a real estate application. As you know, location is important in real estate, and I would like to use longitude and latitude of the property as an input. If I convert either of these readings to say decimal, e.g. 46.22353 and -78.34095, can I use them as variables in NeuroShell Classifier or Predictor.
A. You can use longitude and latitude but the neural net will probably not be sensitive to very many significant digits, so it will not be able to distinguish between nearby clusters. If it does distinguish, use of those variables will not relate homes in one cluster on the east side of town to a cluster of the same type of neighborhood on the west side of town. So we don’t think longitude and latitude are a good idea. We think it will be much more effective to pick up location using one of the following techniques:
1. Make a variable from 1 to 10 say that describes the type of neighborhood (1 = small clapboard house beside the railroad tracks, 10=wealthy executive neighborhood).
2. Maybe better than 1 to 10 is an input variable that gives the average real estate price in the immediate neighborhood. Or maybe this variable could be used WITH the above.
3. Build separate models (nets) for each type of neighborhood. Maybe one for each type of home or neighborhood – expensive homes, medium homes, working class homes. You’ll probably want a separate model at least for each city or section of a major city. That way all models are comparing apples to apples. Of course, getting enough data comes into play here. If you find that there aren’t too many examples in some model, use the genetic method, which is better with sparse data.
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III. The Formula Detective(SM) Data Mining Service
In February we launched a new service that we call the Formula Detective (SM) Data Mining Service. This is not software we are selling, but as the name implies, a service we will provide. Basically it will work like this – you send us your data and we find a formula that best fits the data. The formula will be one you can show your boss. You don’t have to buy any software or spend hours of your time figuring out the best way to use the software. We also provide you with a rating of the effectiveness of the variables in the data.
There will be a modest non-refundable deposit, but beyond that you won’t have to pay for the service unless you like the results the formula provides.
The details of our new service are now up on www.formuladetective.com.
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IV. NeuroShell and FX currencies
There has been a lot of confusion about whether NeuroShell Trader, Trader Pro, and DayTrader Pro can work with forex currencies. Yes, indeed they can, and eSignal, which we support, provides intraday FX datastreams. In fact, NeuroShell will work with virtually any financial instrument for which historical price datastreams are available. There are no special indicators needed for FX models, and most models you build have an equal chance of being profitable with Forex as with stocks or futures.
If you are a forex trader the following will assist you in determining how to enter costs into NeuroShell:
Just put in the number of lots where we ask for “contracts” or “shares”. Where we ask for “point value” put in the pip value times the number of pips in one price point. The spread would just be entered as “slippage”, but it should be entered as a fraction of a price point (i.e., if the spread is 5 pips, enter the fraction of a price point that 5 pips represent). Put the margin in either as an absolute amount or the percentage (for example 50:1 is 2%).
Actually, for getting good signals it isn’t really important that the exact costs be entered. In fact, when optimizing, we often suggest adding more commission (or slippage) if optimization produces too many trades, and decreasing commission (or slippage) amounts if optimization produces to few trades for your tastes. You can actually add some commission amounts to a forex chart if you want to to adjust trading frequency during optimization. The actual profits may thus be slightly off, but what you are really after if the best trading signals you can get. It is more important that market forecasting models produce good trading signals than that they produce highly precise profit calculations.
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V. Make sure you continue to get the news
We are still surprised that, many months after we sent out our June newsletter announcing release 4.0, users are still calling or emailing to ask when release 4.0 will be available. Seems they all changed their email addresses and never notified us of that. They could have been making money with the new features all of this time. There are many others, no doubt, who still don’t know about release 4.0.
After all these years we are also still getting tech support calls from NeuroShell 2 users who don’t know about the AI Trilogy and its components. So they’re stuck trying to impress their bosses with older technology.
Don’t be left behind – tell us when you change email addresses.
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