Greetings
from NeuroDimension!
The World Leader in Neural Network Software
This issue of the TradingSolutions
newsletter highlights trading solutions and ways of selecting appropriate
inputs for your predictions.
In this issue you’ll find:
Feature
Spotlight
*
Trading Solutions
- Using a
Trading Solution
- Tips for
Using Trading Solutions
- Sample
Trading Solutions
* Choose your Inputs
Wisely
Products
and Events of Interest
*
Neural Network Training Course
*
Neural 101 Website
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One of the most powerful timesaving features in
TradingSolutions is “trading solutions”. Trading solutions allow you to bundle
multiple field definitions together into a single concept that can be applied
to new data. In addition, they can also be exported and shared with other
TradingSolutions users.
Here is an example of when you would use a trading solution.
Let’s say you have predicted the optimal signal using the closing price, a
moving average of the closing price, and the momentum of the closing price as
the inputs. You like the results and would like to try this method against
other selected stocks. A trading solution can be used to bundle all of these
field definitions together so that they can be applied to new data.
To create your trading solution, select “Define Trading
Solutions…” from the Tools menu or the toolbar. Press the “New…” button from
beneath the list of trading solutions and follow the step-by-step wizard. The
key step in the wizard is selecting a source field on which to base your
trading solution. In this case, you would select the predicted optimal signal.
Once created, your trading solution will automatically include all of the
fields needed to create this source field, including the calculated inputs and
the desired optimal signal.
To use your created trading solution, select “Add New
Field…” from the context menu for the data series in which you would like to
create the fields. Then, select “Use a complete trading solution to produce one
or more values” and follow the step-by-step wizard. All of the required fields
will be created and calculated in the new data series. These fields can then be
used just like any other fields you may create.
Here are a few tips to help you get the most out of trading
solutions.
Let’s say you would like to try the same method with
different price information. For example, you may want to use the Median Price
(the average of the high and low prices) instead of the Close for all of your
calculations. To do this, simply create a Median Price field and indicate to
use it for the value of the Close input when applying your trading solution.
Every usage of the Close field will be replaced with the Median Price field.
(Note: Be aware this can sometimes lead to unexpected results. For example, if
the optimal signal included in the trading solution is based on the Close
field, it will be created based on the Median Price.)
If you have created a set of signal analysis fields to
analyze a predicted signal, you can include them in your trading solution by
using one of the signal analysis fields as the source for the trading solution,
rather than the predicted signal. To list non-signal fields in the list of
available source fields, select “Display non-signals in the list of potential
source fields.” Since the signal analysis fields require the predicted field in
order to be calculated, the predicted field and all of its inputs will be included
automatically.
Finally, if you have multiple predictions, it is possible to
make a single trading solution containing all of your predictions. Simply
create a committee of the predictions you would like to include and use that
committee as the source for your trading solution. This will include all of the
fields required for all of the predictions to recreate the committee.
For examples of trading solutions in action, see the
Solution Library on the TradingSolutions web site. Simply download the
solutions, unzip them, and import them into TradingSolutions using “Import
Trading Solutions…” from the File menu. The Solution Library is located at:
http://www.tradingsolutions.com/download/solution.html
For more information on trading solutions, see the “Working
with Complete Trading Solutions” chapter of the online help.
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A common misconception with those new to neural networks is
that the more inputs you give a neural network, the more information it has and
the better the resulting model will be. This is often not the case. The phrase
"garbage in, garbage out" is an adage often used to describe the
result of feeding bad inputs into a neural network. If the input data is not
relevant to the desired output, the network will have a more difficult time
learning the associations between the relevant inputs and the desired output.
There are three general approaches we recommend for
selecting relevant neural network inputs within TradingSolutions. The first is
to use a set of indicators commonly used in traditional technical analysis. For
example, the Electronic Arts model on the TradingSolutions web site uses a set
of indicators that give the neural network the same information used by
chartists who use Japanese candlestick charts.
Another approach is to use the correlation analysis feature
of TradingSolutions. Correlation Analysis is useful for searching for linear
relationships between the desired output and a set of proposed inputs.
Specifically, correlation analysis determines if an input and the desired
output move in the same direction by similar amounts. Using inputs with high
(positive or negative) correlation values will often produce good models. See
Tutorial 4, Activity 2 for step-by-step instructions on performing a
correlation analysis.
Those that have a few hours of extra processing time
available may want to use the genetic optimization approach to input selection.
After selecting 10-15 input candidates, you let a genetic algorithm train the
network several hundred times to find the combination of those inputs that
produced a network output that most closely matched the desired output. See
Tutorial 2, Task 4, Activity 4 for step-by-step instructions on using genetic
optimization for input selection.
There is no magic number of inputs that works best in all
cases. A network with fewer inputs will be less likely than one with more
inputs to overfit ("memorize") the training data. It is worth
pointing out that all four of the sample models on the TradingSolutions web
site use no more than five inputs.
Descriptions of the sample models referenced in this article
can be accessed from:
http://www.tradingsolutions.com/products/sample.html
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Our course format allows both novice and advanced users to
find a suitable course. Offered courses include: "Introduction to NeuroSolutions",
"Fundamentals of Neural Networks and NeuroSolutions", and
"Advanced NeuroSolutions".
The courses include a copy of our interactive book, Neural
and Adaptive Systems: Fundamentals Through Simulations. We are also happy
to work with attendees who would like to use their own data in the sample
projects. Sign-up early to receive a 10% early registration discount.
For details on this new offering, or to sign-up from the
Internet, see http://www.nd.com/course/may_2001.htm
For general ND course information, see http://www.nd.com/course
For more information and samples of the interactive book,
see http://www.nd.com/products/nsbook.htm
Neural 101
is a free educational web site on trading stock and futures markets with neural
networks. It includes message areas, links, trading indicators, systems and
scans. The message areas include special forums on building trading systems,
using neural networks, and even discussing tips, tricks, and ideas for using
TradingSolutions.
NeuroDimension
encourages the use of this free resource to foster discussions between
TradingSolutions users. You can visit Neural 101 at http://www.neural101.com. You can go
directly to the TradingSolutions section by selecting “TS” from the top menu.
The message forum can then be reached by selecting “Message Forum” from the left-hand
menu.
Have an event or product you would like to announce? Contact
us at submissions@nd.com.
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We appreciate your feedback! Please send us your comments or
suggestions concerning this newsletter, our web site, or part of the
NeuroDimension product line. Write to us at: feedback@nd.com
Have questions about TradingSolutions? Send your questions
to: info@tradingsolutions.com
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