November 2000 Newsletter

I. Thanksgiving sale

In the USA Thanksgiving is a time to give thanks for all of our good fortune and happiness throughout the year. This year, we’re thankful for the thousands of wonderful customers and friends we’ve made this year and previously. We’re also happy that so many of you are saying good things about our products so that others will buy them too and keep our company healthy and there for you in the future. So we will share our Thanksgiving with you by offering a 15% discount on any of our products or upgrades (except the AI Trilogy, which is already very heavily discounted) on products ordered today through November 27th, 2000.

This sale cannot be combined with any other discounts or promotions.


II. Announcing the Cluster Indicators Trader add-on

Building addons is so easy with the NeuroShell Trader Professional that everyone who is a programmer should try it. If you’re not a programmer we try to provide our addons at the reasonable price of only $249 and we’ve now got another great one no serious trader should be without! This one, like some of our others, is based on how the human brain might classify the market, but it isn’t even a neural network (although neural net enthusiasts will see this as a Kohonen Self Organizing Map, trained by genetic algorithm!)

Think about this: Suppose you have two good inputs. Now suppose you made a scatter plot of a bunch of recent bars’ worth of these inputs (for the math minded, all recent bars are plotted with one input on the Y axis and the other on the X axis). Now suppose the inputs are good, as defined by the fact that their patterns foretell an uptrend or a downtrend in the price. Then wouldn’t the bars that precede an uptrend look somewhat similar, at least after they were “normalized”? Wouldn’t those that precede a downtrend look similar too? In other words, wouldn’t the buy bars cluster together and the sell bars cluster together?

Our new Cluster Indicators tell you how far the current bar is from the cluster center of the recent “buy” bars or “sell” bars. You can use a Cluster Indicator as a buy rule, buying when the current bar is “close” to the cluster center of recent “buy” bars. Sell when the current bar is “close” to the “sell” cluster center.

The genetic algorithm optimizer in the Trader Pro or DayTrader Pro finds the cluster centers that optimize the profit.

The Cluster Indicators also make dynamite inputs to a neural network. (For the neural net enthusiasts, this creates a paradigm much like the popular classic Radial Basis Function neural nets, except in the Trader Pro, your clusters don’t have to all be based on the same inputs, and in fact can be optimized! There was also a paradigm called Counter-propagation that was similar to feeding our Cluster Indicators into a neural net.)

Now expand the concept to as many as 16 inputs. Those can’t be plotted because you’d need a 16 dimensional scatter plot. But you can still measure how close the current bar is to a 16 dimensional cluster center! There are 16 Cluster Indicators in the addon.

Let’s carry the concept a little further. Suppose some of the inputs are less effective than others in determining whether there is a buy or sell situation. You wouldn’t want to consider these inputs as much when determining clusters and “closeness”. No problem, we have 8 Cluster “contribution” Indicators, each of which has contribution factors that reduce or increase the impact of an indicator. You can set these contribution factors yourself or you can let the genetic algorithm do it for you. Either way, you now have a more powerful clustering indicator.

Be the first on your block to get the Cluster Indicators addon. Although it will not be shipping for a week or two, we will take back-orders now so that you can take advantage of the Thanksgiving sale to purchase it.


III. Science and business apps: reversing neural nets???

Some of you who are using artificial intelligence in science and business have wondered, “Can I feed desired answers into a neural net and get back the inputs that create those answers?” Well, yes and no. Yes, you can do what you want, but no, not in the way we just described it. We’ll examine the no part first.

Neural nets perform what is known in mathematics as “many to one mappings.” That is, many sets of dissimilar input patterns can produce the same output values. Any attempt to shove answers backwards through a neural net might produce some type of “average” input set, but it probably won’t be the one you’re looking for. (Our CEO is fond of saying it’s like trying to shove cow chips back through a cow to get grass!)

Now here’s the yes part. Obviously you could try combinations of inputs looking for those that produce the desired output. That would find lots of the right combinations, but it would be very time consuming – unless you own GeneHunter! Fire the net in an Excel spreadsheet and then let GeneHunter home in on great inputs. You can even apply restrictions if you like (input 1 must be at least twice input 2, and input 3 must be over 100, etc.).

Guess what? This is why we built the new AI Trilogy! As our last two newsletters mentioned, the Trilogy is a deeply discounted packaging of all the components you’ll need, with examples. Get yours before your competition does and before the price goes up!


IV. The Global Investor touts non-linear maths for financial predictions

Desmond MacRae is an expert who has written a number of excellent articles on mathematical methods in trading, and he has just recently published another. The July/August 2000 issue of the UK journal Global Investor contains Desmond’s article “Non-linear maths: handmaiden of post-modern finance”. We are proud to be mentioned by Desmond: “Through Ward Systems, non-linear maths techniques are available even to users who have only a layman’s understanding of how non-linear algorithms actually work. … On the surface it sounds simple, but what this program can do is discover multidimensional patterns in price time series that are too complex to be seen in a standard chart.”


V. Trader Tips. Did you know…

1. Did you know that the indicator set of the Trader can be extended by you using standard programming languages such as Basic, C, C++, and Pascal? If you can program in any of these languages, you can extend the usefulness of the Trader, Trader Pro, or DayTrader by building subroutines that process data on the chart and return new data streams to the chart. These subroutines are called “dynamic link libraries”, or just “DLLs”, but don’t let the fancy name lead you to believe programming them is hard. It is actually easier to program a DLL than writing a conventional program, because there are no input/output routines to worry about. We have examples written in Powerbasic, Microsoft C, and Delphi on our advanced user’s site Note: Visual Basic does not make real DLLs, but Powerbasic is an inexpensive DLL-making compiler that is very easy to use. See If you want to use Visual Basic, you will need our DataX addon for that. See for details.

2. Did you know that you can use as an internet data server even if you don’t own the DayTrader? Both the NeuroShell Trader and Trader Professional will download historical daily bars from if you already have an account with

3. Did you know that you can use stop and limit orders in the Trader? You use indicators to indicate the stop and limit prices, and we provide several standard ones in the “Trading Strategy: Protective Stops” category, or you can write your own. They will even be optimized if you optimize your trading strategy.

4. Did you know that our Advanced Indicator Set 1 has five chaos and fractal indicators, including Hurst? It also has moon phases (don’t laugh – ask any emergency room doctor or nurse if they aren’t busier when the moon is full!)


VI. The referral $$$ program is still going on

Do you have friends or colleagues who could benefit from one of our major products (any version of NeuroShell, GeneHunter, or the Trilogy)? Refer that person to us and get yourself a $249 credit towards the purchase of any of our products, addons, or upgrades! Yes, if they purchase any of our major products between now and the first of the year and keep it, you’ll save $249 on your next purchase! Just make sure you or the person referred informs us about the referral within a week of purchase. Trader users please note that the $249 will completely pay for one of our Trader addon products!


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