I. NeuroShell to be paired with largest commercial supercomputer!
Ward Systems Group, Inc. has entered into an agreement with JJX Capital,
Inc. to supply Ward’s NeuroShell DayTrader Professional software for use on
the world’s largest commercial supercomputer used for investing in the
markets. Through the use of the supercomputer and the NeuroShell Trader
Professional software, JJX plans to create a system that reduces risk in
investing and reduces risk in decision making, allowing JJX Capital to
exceed the technical ability of any and every fund manager in the world
today. Currently the fund is backed by a Fortune 500 company.
The project is based on the premise that each professional money manager has
a different system for choosing what investments to make, when to enter and
when to exit the market to increase profit or decrease loss, and each
professional uses varying amounts of computer power to help make these
decisions on a daily basis.
Although each professional has a different system, all draw from the same
set of 800+ technical indicators to analyze the markets and make investment
decisions. Some managers chose 5 of the 800, some chose 10, some chose 60 or
70 with each manager limited in his selections only by the amount of
computer power used by his company.
For more information on NeuroShell DayTrader Professional software, visit
www.neuroshell.com. For more information on the fund, visit
www.jjxcapital.com.
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II. Mixing science and business with trading – why not?
Lately we’ve been struck by the overlap between our business-science and
trading communities. Many of you who have been doing science and business
models all these years wouldn’t mind making a little money too. Many of you
traders are neural net techies deep down inside.
So we thought it might be important to make sure everyone is aware of the
interface between our premier trading products and our business and science
products. That’s right, you can build nets with the NeuroShell Predictor,
NeuroShell Classifier, and even NeuroShell 2 and then execute them in the
NeuroShell Trader Professional and DayTrader Professional. You can even take
advantage of GeneHunter.
What does that mean for you?
If you are a business and science user of one of our non-trading neural net
products, you can get into trading without climbing a big learning curve.
You can make some money from the knowledge and experience you’ve gained over
the years in neural nets. Even if you are one of those die-hard NeuroShell 2
users Steve Ward wrote about in the last newsletter, you can keep right on
tweaking backprop while you take advantage of the NeuroShell Trader
Professional interface.
If you are a trader who wants more flexibility in crafting training sets,
you can use make your nets offline with the NeuroShell Predictor,
Classifier, and NeuroShell 2. Then use those nets just as if they were any
other type of indicator. You can also use some of the advanced features of
the genetic method. They include the “one hold out” jackknife which makes
training with few bars more practical without overfitting, and the ability
to craft fitness functions in the Classifier to give priority to the
reduction of certain types of misclassifications.
How do you do it?
Ok, here’s how you can use Predictor and Classifier with the Trader Pro or
DayTrader Pro. Get your data in the Trader using its easy interface to data
feeds. Create indicators using the Indicator Wizard. Now export the data and
indicator streams as a text file using the “Tools” then “Export Chart/data”
menu.
Now you have a .csv file that can be read by Predictor, Classifier,
NeuroShell 2, or loaded into Excel for manipulation. This will be your
training set.
Train your net and save it. If you are using the Predictor or Classifier,
you will also need the RunTime Server (remember the RunTime Server is
included in the AI Trilogy).
Now insert an indicator that will fire the net you have built. Look in the
indicator category called “External Program and Library Calls”. You’ll see
it’s a piece of cake to reference your saved net and the particular output
you want (in case of the Classifier or NeuroShell 2).
What about GeneHunter?
If you own GeneHunter or the AI Trilogy and you want to control optimization
more than you can in the Trader Professional, you can probably even do some
offline optimization of indicators and trading strategies (of course you
will have to put your own formulas for indicators into Excel). Then just
plug the resulting parameters into the DayTrader Trading Strategy Wizard for
real time signals from the data feed. GeneHunter even has examples of
indicator optimization.
Furthermore, we’re often asked if the Trader Professional can optimize
portfolios. The answer is always “No, but GeneHunter can.”
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III. April’s featured product – Cluster Indicators Add-on
What would spring into you mind if the following “indicators” started taking
on these “values” all at once:
1. The sky turns dark
2. The sky turns cloudy
3. The wind starts blowing hard
4. A few raindrops start to fall
5. Seagulls stay on the ground
A thunderstorm is coming very soon, right? If any one of the indicators
occurred by itself, you would not necessarily expect a storm, would you? But
when they cluster together in time, the evidence is pretty strong that you
should go indoors quickly.
Now what do you think when you’re in a storm and the indicator values
cluster together differently:
1. The sky turns blue
2. The clouds disappear
3. The wind stops blowing hard
4. The raindrops dissipate
5. Seagulls start flying
The storm is moving away, right? Usually, all five of these indicators
cluster together in time when the storm is about to end – the rain can stop
and the wind could slow down, but if the sky were still dark and cloudy
you’d stay indoors for a while longer.
Our minds have learned through experience to associate coming events based
on different clustering of indicator values. It may take examination of more
than one indicator to predict an event.
Yet before the advent of the NeuroShell Trader Professional, many of us were
taught to believe that one indicator might foretell the rising or falling of
a financial issue, weren’t we? Reading the literature, you can see there are
people still trying to convince us of that. Granted, the human mind cannot
assimilate the clustering of more than about two indicators at once, unless
you are John Nash portrayed in “A Beautiful Mind”. But the NeuroShell Trader
Professional can!
The Cluster indicators add-on is based on the belief that multiple
indicators have to position themselves in certain ways (roughly) in order to
more accurately predict a price rise or fall. How many indicators and which
ones? We have to leave something for you to decide! You can put up to 16
indicators into the Cluster Indicators.
The optimizer will figure out where your indicators are clustering before a
price rise, and before a price drop. At the same time, they will adjust your
indicator parameters so that the clustering becomes more indicative of a
price movement. You put a cluster indicator in as a buy condition, and the
indicator gives you a signal which tells you how close the new bar coming in
is to where historically indicators gathered together before a price rise.
It will also give you a threshold so you will know how close is close enough
for a purchase. You put another cluster indicator in for a sell condition.
Now let’s go back to the storm indicators. The seagulls are probably less
important of an indicator than the others. If the sky gets dark and cloudy,
the wind kicks up, and rain starts to fall, you probably won’t need to find
a seagull before you decide to go indoors. But it might confirm your
decision if all the seagulls are hunkered down in the sand. We have included
some Cluster Indicators in our set which can decide how important each
indicator is relative to the others, and reduce or raise the effect of these
indicators on the signal generated. Actually the optimizer finds this out,
and these Cluster Indicators will cluster up to 8 “input” indicators.
For more details on Cluster Indicators, see www.neuroshell.com in the
add-ons section. Paste the following link into your browser:
http://www.neuroshell.com/addons.asp?cluster
PS – our non-trading customers can do clustering too if they own either
GeneHunter or NeuroShell 2.
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IV. Editorial Opinion from Steve Ward, CEO
Last month I asked business and science customers to email us if they were
interested in the modeling class I proposed based on the NeuroShell
Predictor and Classifier. I was feeling guilty about criticism we get from
time to time that we are paying too much attention to traders’ needs. I only
received three emails.
Granted, the request was at the end of my long editorial; maybe some of you
fell asleep before you got there. So if you see this and would like to
respond positively, you may still do so.
Nevertheless, I want to see if the traders have more interest in education,
since so many of you took the last two sessions of the NeuroShell Trader
Advanced Course. It took an entire summer to prepare that last class, so I
can only do one this year.
Therefore I now ask how many users would like an online class about all the
NeuroShell Trader add-ons (Cluster Indicators, Fuzzy Pattern Recognizer,
Adaptive Turboprop2, Adaptive Net Indicators, Neural Indicators, Advanced
Indicator Set 1, and the Data Exchange add-on). Send us an email if you
would enroll in such a course (online) later in the fall.
The price of either class would be $670 and you can see how they would work
by visiting www.AICollege.com.
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V. No more newsletters in the future?
No, we aren’t ending this newsletter. But you will think we did if you
change your email address and don’t send us your new one!
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