In this issue:
I. NeuroShell Classifier User beats the market
II. Big sale of the summer – for business, science, and financial users
III. Windows XP – Opinion of Steve Ward, CEO
IV. NeuroShell Trader Issues When Upgrading OS or Migrating/Copying to Another Hard Disk
V. AI College back in session
VI. Make sure you continue to get the news
*******************************************************
I. NeuroShell Classifier User beats the market
Jeff Parent has had success in modeling the US stock markets using the NeuroShell Classifier. He collects technical analysis-based data taken at the outset of an outlier event and uses the data as inputs for a classifier net. Many of the trained nets correctly identify up to 70% of the outcomes from the validation set. This is a good result considering the notoriously noisy stock markets. Parent has been analyzing stocks for over 12 years and has authored articles for Technical Analysis of Stocks and Commodities Magazine.
Model Creation
Many analysts and academics do not believe it is possible to make profitable, short-term predictions of the stock markets. It is often said that markets are efficient in adjusting price to reflect changes in value thereby providing few trading opportunities. In general, Parent agrees with this statement. However, by focusing on outlier events only, he has been able to increase the odds of making successful predictions. At the beginning of an unusual price movement, more so than in a normal market, he believes there are clues to a potential outcome embedded in the technical factors of a stock. Working with a classifier net is natural because the results he is looking for are in the ‘event will/will not likely occur’ form.
An example of an outlier event is a stock trading at an unusually low level from a previous day’s average price. The outcome to be determined is whether or not the stock will revert back to the average price on the following day. As one possibility, Parent defines a low level as a stock dropping in value by a percentage of it average volatility. Technical indicator values like RSI and relative volatility and general market conditions are collected on the day before the drop. Knowing the condition of the markets puts the stock’s movements into perspective. Equally important is knowing how the stock has acted over the past several days, so recent values of the same technical indicators are included. In all, about 10-12 values are known at the moment before the event. The final piece of data collected is the outcome. After the ‘dip’, did the stock revert back to the average price or not?
Parent describe the process, “Up to ten years of data from actively traded stocks are scanned to net about 40,000 ‘dip’ events. Once collected, the event data must be divided into training and validation sets. Events are sorted by date and separated into somewhat randomly selected chunks of 6-12 month segments. One portion is set aside for validation. The balance is used to for training purposes. Having equal amounts of both outcomes in the training set is necessary to ensure the network finds a non-trivial solution. Therefore, equal amounts of data from positive outcomes (the stock reverts to the average price) and negative outcomes are added together to complete the training set.”
Validation and Usage
He continues, “I use the Classifier’s TurboProp2 method. It trains faster and I intuitively believe it is more likely to be aligned with the task. To be considered a success, I look for low false-positive rates and consistency between training and validation results. Normally, the ‘dip’ buyer strategy requires setting price alerts or placing stop buy orders on up to 500 stocks each day. Due to capital limitations, positions are taken only in the first 10-20 stocks hitting their targets. Using the trained network the same list is screened. A smaller watch list is created and profit on each position taken is potentially better. I have been very happy with the results. The Classifier is easy to use and very powerful.”
*******************************************************
II. Big sale of the summer – for business, science, and financial users
This is our biggest and probably the last sale of the summer – the Granny Surfer Sale. While you’re riding the waves at the beach this summer, don’t “wipe out” and be sure to look out for Granny! She may be surfing too!
We want to make sure you don’t wipe out on the Wall Street waves either, so we’re going to make it easier for you to stay on TOP of the market waves! From now until August 31, 2004, take 15% off the list prices of the entire NeuroShell Trader Series, including add-ons (only those that we develop. Discount does not apply to third party add-ons such as those developed by Bowfort, Cornice Research, Emmetropia, Jurik and MESA) and upgrades. Remember the old market wisdom “Buy your straw hats in the fall” to which we add “Buy your NeuroShell Trader software in the summer!”
For our business, science and educational users, take 15% off of the list prices of full version purchases of the NeuroShell Classifier, NeuroShell Predictor, NeuroShell Run-time Server, GeneHunter, and even the NeuroShell Engine.
For more details and restrictions, visit www.neuroShell.com or www.wardsystems.com.
*******************************************************
III. Windows XP – Opinion of Steve Ward, CEO
For years I ran Windows 98, not wanting to convert to ME or Win 2000 because of my comfort level with 98 and my feeling that those operating systems weren’t any better in terms of reliability and ease of use. After all, Microsoft was still fixing bugs on 98 weren’t they? A few others at Ward Systems felt the same way, hanging on to 98 while the others moved on. Looking back, I’m still comfortable with my decision to stay put with 98, because I’m still not fond of Windows 2000 and ME is dead anyway.
Then when NeuroShell Trader 4.0 came out not supporting Windows 98, I STILL held onto the old OS on my main office computer – I just purchased a new laptop with XP Pro on it so I’d have a supported computer to run NeuroShell on. Boy was I surprised at how smoothly my new laptop ran. In the more than a year since I’ve had it I don’t think XP has crashed or hung more than a couple of times. I just love the advanced plug and play support too.
So I took the plunge and converted by desktop too. That was hard because my staff strongly advised me not to just upgrade the OS, but to reformat my hard drive and install as a new computer to get rid of all the accumulated trash in system folders, registry, etc. That stuff, much left over from long dead programs, could do nothing but cause trouble. That meant reinstalling all programs I wanted to keep, however, as well as saving old data files on CD first. It was a somewhat painful process, but boy was it worth it. I am so happy with my desktop now – same machine runs better and faster, with virtually no problems. Everyone at Ward Systems is now on XP, and all are happy with it.
If you are a NeuroShell Trader 4.x user and decide to move to XP as I did, and I hope you do, here is fair warning. YOU HAVE TO DEACTIVATE YOUR SOFTWARE FIRST. In fact, please carefully read the next article written by our tech support team.
PS – Microsoft did not pay me to write this opinion piece!
*******************************************************
IV. NeuroShell Trader Issues When Upgrading OS or Migrating/Copying to Another Hard Disk
We have had reports of problems running the NeuroShell Trader software on a hard disk which was populated with the contents of another hard disk via a disk copy/migration/relocation program such as Norton Ghost or Alohabob PC Relocator. We have also had reports of problems from users trying the run the software after upgrading their Windows operating system to a newer version. So far, we have been able to fix these problems, but there might be a time that we can’t.
Therefore, we suggest that if you are going to do anything major with your hard drive like any of the following:
1. upgrade your operating system from 98/ME to 2000/XP or from 2000 to XP
2. convert your hard disk from FAT, FAT16, FAT32 to NTFS or vice versa
3. copy the contents of your current drive to a new drive using a disk copy/migration/relocation tool
that you first deactivate the software using the Authorization… button you’ll find when you go to the Help/About NeuroShell Trader menu. You also need to uninstall using the Windows Control Panel, Add/Remove software dialog before performing any of the above actions. Then once you have performed any of the above actions, you can then reinstall the NeuroShell Trader software and reactivate. Following this procedure will allow you to avoid the headache of fixing a bad problem.
*******************************************************
V. AI College back in session
If you are a user of NeuroShell Trader Professional or NeuroShell DayTrader Professional, you will now be able to get some advanced training on your own time in your own home or office. Our online course is $670 + shipping of the AI College CD and is taught by our CEO Steve Ward. Visit www.aicollege.com for more details.
*******************************************************
VI. Make sure you continue to get the news
We are still surprised that, many months after we sent out our June 2003 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.
*******************************************************