But what does this mean when you’re creating a predictive model?
The daily chart below shows both trending and sideways markets with a number of peaks and valleys that signify patterns that can be learned by neural nets.
Once you’ve identified an appropriate security or securities, the next step is to select indicators or other instrument data that can capture leading patterns. Graph the data on the chart and select those that show movement ahead of the price curve.
|In the prediction above, blue triangles denote Long Entry signals, while the red triangles are Short Entry Signals.|
The resulting prediction captures patterns in both the short and long term time frames as noted by signals appearing in peaks and valleys and generates a slowly rising equity curve.