March 2001 Newsletter

I. How to keep receiving this newsletter

It’s really simple: just tell us when your email address changes! If you like this newsletter, remember to call or email to tell us if you change your email address. Otherwise, you’ll stop hearing from us.

II. Another NeuroShell Trader user makes over $1 million

Scott McCormick made over $1 million with the help of the NeuroShell Trader. McCormick’s work is described in Mark Ingebretsen’s excellent new book “The Guts & Glory of Day Trading” – TRUE STORIES OF DAY TRADERS WHO MADE (OR LOST) $1,000,000. “If only I had a brain…, Scott McCormick: the AI Guy” is a complete chapter which describes how Scott’s returns have been over seven figures with the help of our neural nets. In fact his returns have never fallen below 50%. In the interview, Scott relates his use of the NeuroShell Trader, and even gives readers his overall trading rules and other techniques. The Guts and Glory of Day Trading is published by Prima Publishing, Roseville, California, ISBN 0-7615-2803-2. The book lists for only $24.95 (we got it for $19.96 from Borders.com) and it is well worth the money.

We decided we should interview Scott ourselves, and you can read the interview on the “Real Traders” section of www.neuroshell.com.

III. Fuzzy Pattern Recognizer Trader add-on now shipping

How many times have you wished you could just let your software scan a price series and let you know when it has found a particular pattern that you like? You have in your mind a special pattern of moves that you believe could precede a strong change in the market, but you’d like the software to just monitor the incoming bars looking for your pattern. Well now you can do just that with the Fuzzy Pattern Recognizer add-on for the NeuroShell Trader series! And you can do it using Fuzzy Logic!

For more information, see the Add-ons section of www.neuroshell.com.

The Fuzzy Pattern Recognizer add-on is now ready and costs $249 plus shipping. Be the first on your block to get this important new add-on. This is an introductory price and it could go up in the future because these are such powerful and unique indicators!

If you purchase the Fuzzy Pattern Recognizer before April 15, we will include a free set of the new release 3.21 CDs (see the next article). (PS: You may have to wait several days for shipment, however, because we are backlogged on rel 3.21 CD orders and Fuzzy add-on orders.)

IV. NeuroShell Trader 3.21 released

Release 3.21 is now finally available. We have been working for a long time on this release, and we believe it is our most stable release yet. It was first released as release 3.2 on www.ward.net for free download, but a couple of problems were corrected to make release 3.21.

Changes include more control over the Quote.com data feed, the capability of changing chart frequency without redoing your chart, and the addition of analysis templates that allow you to apply a pre-saved analysis/chart layout to a new chart. This version also now works with Asian versions of Microsoft Windows.

The new release also contains a number of other improvements, such as allowing you to export a separate data file for each chart page in one step, and more objective functions for optimizations. Also, there is the addition of commissions, slippage, and number of shares to trade to the prediction wizard. Finally, we have added the ability to reconstruct a custom indicator back into the original indicator structure before it was saved.

This release also eliminates the necessity of mapping TradeStation directories if you are using the Global Server with daily bars. This release has an unsupported “use at your own risk” interface to Global Server for intraday bars as discussed in our last newsletter.

Release 3.21 is for all versions of the Trader (Trader, Trader Pro, and DayTrader). You may download it free from www.ward.net. (You can also download a patch there to take you to rel 3.21 if you already downloaded rel 3.2, which was up for about two weeks before we replaced it with 3.21) If you wish, you can order a new set of CDs for $30 plus shipping and handling.

Note: From now until April 15, 2001, if you purchase the Fuzzy Pattern Recognizer add-on, or any other add-on, we will include a free set of Release 3.21 CDs with the shipment, saving you $30. (PS: You may have to wait several days for shipment, however, because we are backlogged on rel 3.21 CD orders and Fuzzy add-on orders.)

V. Fish Net?

“The ageing of fishes, and consequently the determination of their growth and mortality rates, is an integral component of modern fisheries science.” This quote from another researcher begins Simon Robertson’s paper that he wrote with his colleague Alexander Morison at the Marine and Freshwater Resources Institute in Queenscliff Victoria, Australia. Robertson and Morison’s paper “A trial of artificial neural networks for automatically estimating the age of fish” is the first of several papers from them on fisheries science. This one details their experiments on determining the age of fish by pattern recognition using our neural nets of “sectioned otoliths”. (Our layman’s translation: they sliced up fish and made bitmap images by illuminating the thin slices under a microscope!)

Robertson and Morison concluded, “This study demonstrated that ANNs have the ability to estimate the age of at least some species and some age classes of fish from images of their otoliths with an accuracy comparable to that obtained by an experienced reader. That the ANNs used in this study, when provided with input data in the most simplistic form (a single array of luminance values), were able to provide acceptable age estimates strongly supports the potential of the method.”

VI. Trader’s Tips

As many of you know, we usually participate in the Trader’s Tips sections of Technical Analysis of Stocks and Commodities magazine. Almost every month, we build a chart or custom indicator that is being discussed in that issue by some author. What you may not know, however, is that these charts and custom indicators are available to you on www.ward.net, even from older issues (we can’t supply the older issues themselves, the magazine will have to do that for you). In many cases where we have written custom indicators, the C source code for those indicators is also available. Log onto www.ward.net with your serial number, and go to the indicated section.

VII. AI Trilogy Reviewed in INFORMS magazine OR/MS Today

Dr. William Roush from Penn State University has reviewed the AI Trilogy in the current issue of the INFORMS magazine OR/MS Today. Dr. Roush is associated with the Poultry Science Department at Penn State and has used NeuroShell 2 and the NeuroShell Predictor and Classifier for years. He has published numerous papers in his field on the use of neural networks. If you have access to this magazine, you may want to read the review.

VIII. Are we turning into a company primarily for traders?

We get asked this a lot lately, perhaps because most of the articles in our newsletters are about trading and trading products.

We are trying hard not to cater only to Traders, but we have to acknowledge some facts. Over 70% of our income is from traders, and growing. It used to be around 50-60%, but the bear market has made people realize they need help now. (Anybody can make money in a bull market.) In fact, we are now pretty backlogged with orders from traders and investors.

Not only that, but Traders seem to better understand the value of using the latest software and add-ons. Many of our other users buy our software once and never upgrade to the newer technology. Many of you are still using versions we developed from 1988 to 1993!

So we naturally tend to develop more for the segment that is doing the buying. Nevertheless, we want to continue to serve science and business, even though their budgets are quite a bit smaller than those of traders. To this end, we ask for your help:

We encourage scientific and business users to send us your papers and descriptions of projects, so we can publish them on our website. Tell your colleagues about us. We also encourage our trading community to tell your business and scientific friends and colleagues about us. If you have a day job at a company, maybe someone there can use our prediction, classification, and optimization software?

We also frankly encourage NeuroShell 1, NeuroShell 2, and NeuroWindows users to invest in our newer software. We know these were great programs, and you’re used to them, but we’re not saying you have to give them up. You can keep them in your AI toolkit. However, whenever WE solve problems, WE reach for the NeuroShell Predictor or Classifier, not NeuroShell 2 or the older programs. That should tell you something. The “one hold out” cross-validation feature of the Predictor and Classifier alone is worth its weight in gold when you have less than 200 “rows” of example data! If we have time series data, we often use the NeuroShell Trader Professional because of the huge array of preprocessing functions and the highly sophisticated add-ons. It is time to add to your AI toolkit, maybe by investing in the AI Trilogy so you can get all the new products bundled at a substantial discount.

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