Man v. Machine – Artificial Intelligence Trading Software

June 26th, 2015 by VantagePoint Software

artificial-intelligence-trading-software

Artificial Intelligence (AI) systems have had varying degrees of success when measured against humans. In problems such as chess, which succumb to sheer computational firepower, the machines have advanced greatly in a short time.

Like chess, financial markets operate under the supposition of rational participants. Humans are supposed to be calculating the odds, maximizing return and minimizing risk.

If this were indeed the case, artificial intelligence trading software would stand a good chance at bettering its human counterparts in making and capitalizing on market decisions. Unfortunately, rationality is not always the best assumption for either humans or markets. One needs to look no further than the current economic situation to observe how irrational human traits like confidence, fear and greed play out in market dynamics. The uncertainty injected by the human participants makes the markets much harder to predict.

Back Propagation Neural Network

However, artificial intelligence trading software can be successfully applied to certain trading functions, specifically intermarket analysis. An invention by Louis Mendelsohn relates to methods and systems for performing intermarket analysis using neural networks. A neural network is a system of programs and data structures that approximates the operation of the human brain. (Learn more about Neural Networks here.)

Mendelsohn’s invention details proprietary methods and processes for selecting from a large pool of available global financial markets. These are the related markets that have the highest relevance in training neural networks to make market forecasts for each ‘primary’ market with a high degree of predictive accuracy. This selection process includes determining ‘key’ intermarkets, ‘general’ intermarkets, and ‘predictive’ intermarkets from the pool of available markets that correspond to each ‘primary’ market.

Neural Network Software

Market data for each of the key intermarkets, the general intermarkets and the predictive intermarkets can then be processed to train neural networks so that when the neural networks process this input data, predictive output data generated by the neural networks for each primary market are as accurate as possible.

After training the neural networks, all relevant market data for each primary market can be processed with the neural networks to predict future market data. That data is then used to arrive at a predictive technical indicator for use by the trader in making trading decisions.

This process drives the VantagePoint software so humans can make rational trading decisions to master the markets.

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ETF Traders Cash In as Chinese Markets Rally

April 22nd, 2015 by VantagePoint Software

Recent market reforms and the 7-year high in China have given global markets a major boost over the last few days. There’s no denying that changes in one market have a major impact on what happens in another.

chinese markets

Today we take a look at how traders like you can use VantagePoint’s patented Intermarket Analysis and Trend Forecasting to analyze the relationships across markets and get a head start on major trend movements.

In the video above we show you how to improve you ETF trading with 3 recent forecasts from VantagePoint that demonstrate how $SPY $FXI and $PGJ were all brilliant moves for ETF traders.

VantagePoint forecasted an upward trend in the $SPY back on April 6th, giving our customers a 4-day head-start on the 11-day trend that resulted in a $2.56/share profit. The predicted Neural Index gave traders the confirmation they needed to confidently take that trade.

The Chinese ETF $FXI was forecasted to make a move upwards back in mid-March, giving traders a 5-day jump on the market. That 25-day trend resulted in profits over 22%. If your current trading style does not involve the level of Intermarket Analysis that this software is capable of then stop what you are doing, pick up the phone, and be ready to change your life.

We also visit the recent forecast for $PGJ which increased 15% over the last 22 days. It is these direct and indirect market correlations and the ability to properly analyze each and every one of them that allows serious traders to make serious money. Are you seeing impressive results and returns like this? Tell us in the comments below.

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Using Intermarket Analysis to Day Trade the E-Mini S&P 500

March 24th, 2015 by VantagePoint Software

Trading stock index futures, such as the E-mini S&P 500, can be a wild ride. But as the most actively traded, liquid futures contract and the most widely followed market, it’s hard not to want to be involved in the market. But how does the retail trader keep pace and spot trends?

S&P

First, they must have a technical analysis tool that can analyze both past market data on the index itself and intermarket data from various related markets. These related markets might include the Dow Jones Industrial Average, 30-year Treasury bonds, Nasdaq 100, U.S. Dollar Index, the Swiss Franc, the Euro, New York Stock Exchange Composite Index, Dow Jones Utility Average, gold, and crude oil, to name a few.

This data is processed by neural networks to create a leading indicator for the E-mini S&P 500, instead of a lagging indicator.

In this paradigm, a moving average is forecasted for a future date, then compared to today’s actual moving average which is calculated solely on past single-market prices. This approach is similar to a traditional moving average crossover strategy which compares calculated moving averages to one another. The distinction in this paradigm, which transforms this strategy from a lagging into a leading indicator, is that one of the moving averages is a forecast for a future date based substantially on intermarket data, not just calculated on recent single-market data.

Applying Intermarket Analysis to your Trading Strategy

So how can this help you trade a volatile market like the E-mini S&P? In January of 2015 the E-mini had three separate five day trends – closing down five days in a row for two stretches, and also closing higher five days in a row.

Trading software like VantagePoint could have potentially given you a two day jump on the market. For the up trending moves, if the forecasted moving average for the future date is greater than today’s actual moving average, the market is expected to move higher over that time frame. Potentially, you could have gotten in the market two days ahead of other trend followers.

Watch this video below to see how VantagePoint predicted trend moves in the E-mini S&P for February 2015 and helped traders profit over $4200 per contract in just 15 trading days. Read that full blog here.

Similarly, when the forecasted moving average is less than today’s actual moving average, the market is expected to move lower. The difference between the two moving averages from one day to the next (as they are updated each day) indicates the relative strength of the expected move over that time frame.

By utilizing leading indicators for trading the E-mini S&P 500, such as VantagePoint’s proprietary moving average crossover strategy, based on both single-market and intermarket data from globally related markets, early indications of imminent changes in trend direction can become apparent before they show up on traditional daily price charts or can be identified by popular single-market trend following indicators.

You may also like: Predictive Trend Moves in the S&P 500

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Global Market Analysis for S&P 500, Dow and Light Sweet Crude Oil

March 19th, 2015 by VantagePoint Software

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Traders understand that markets are interconnected from a global standpoint and that trading decisions must not be based solely on one target market but on all those affecting it.

VantagePoint software conducts global market analysis on markets around the world which produces trend forecasts that are up to 86% accurate. By utilizing these forecasts, traders have the knowledge, confidence and confirmation to make smart investments.

Watch the video below to see recent activity in the S&P 500 as well as the Dow. More importantly, we’ll show you what VantagePoint forecasted 2 days ahead of these trends that helped our customers get in at the right time and cash in on major profits.

Curious about Light Sweet Crude Oil? We answer the markets hottest question – how low will it go? See what our intermarket analysis software is forecasted for the days ahead.

You May Like: Using Intermarket Analysis to Day Trade the E-Mini S&P 500

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Stock Trading Basics – The Importance of Technical Indicators

March 5th, 2015 by VantagePoint Software

What is the importance of technical indicators in today’s trading conditions?

The Importance of Technical Indicators in Stock Market AnalysisYou’ve done the research on a company, evaluated their balance sheets, and taken into account the P/E ratios and other projections. While this due diligence is extremely important when trading stocks, to maximize your potential for return, make sure you aren’t neglecting the importance of technical indicators in your trading arsenal.

 

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

Technical analysis can be broken down into a number of sub categories depending on the types of technical indicators.

Trend Trading Indicators – Trend Lines

Experienced traders say the first thing any trader should know about a market is the trend. A market can only do three things – it can go up, it can go down, and it can go sideways. Trend Lines are an important trading tool for identifying and confirming the trend direction. They can also help predict areas of support and resistance and help traders spot important chart movements and significant price points.

A Trend Line is a straight line that connects a series of price points. The more price points the line touches, the stronger and more important the trend line is perceived to be. As a general rule, it takes at least three distinct points to confirm a valid trend line.

An Uptrend Line has an upward slope and is drawn by connecting three or more low points on a chart. Each low price point must be higher than the preceding low price point to form the positive sloping line. An Uptrend Line can act as support in a positive trending market. As long as prices continue above the Trend Line, the uptrend is considered intact. If prices break below the Trend Line, it could be an indication that the uptrend is coming to an end.

A Downtrend Line has a downward slope and is drawn by connecting three or more high points on a chart. Each high price point must be lower than the preceding high price point to form the negative sloping line. A Downtrend Line can act as resistance in a negative trending market. As long as price continue below the Trend Line, the downtrend is considered intact. If prices break above the Trend Line, it could be an indication that the downtrend is coming to an end.

Trend Trading Indicators – Moving Averages

Trend lines are the basic indicator of trend, of course, but they are quite subjective, depending on the eye of the beholder. A line that might fit one time frame may not be right for another time frame.So analysts have refined technical indicators that can verify visible trend observations from a price chart.

Perhaps the simplest to understand and most widely used of these technical indicators is a moving average, which traders have used for many years to smooth out erratic short-term price fluctuations to reveal existing trends or situations where a trend may be ready to begin or about to reverse.

The Simple Moving Average (SMA) is calculated by adding prices for a specified period of time and dividing by the number of prices in that period to get an average. Each price is given an equal weight. As each new price becomes available, the oldest price is dropped from the calculation. Many traders use a six day moving average.

Moving Averages and the Importance of Technical Indicators

With a Weighted Moving Average (WMA) more weight is given to the latest price, which is regarded as more important than older prices. If you are calculating a three-day weighted moving average, for example, the latest price might be multiplied by 3, yesterday’s price by 2 and the oldest price three days ago by 1. The sum of these figures is divided by the sum of the weighting factors – 6 in this example. This makes the weighted moving average more responsive to current price changes.

Moving averages have several uses: (1) Reveal trends by smoothing out data when market “noise” produces erratic price patterns, (2) identify points where trends may be ready to begin or end, (3) indicate shifts in market momentum based on the performance of price vs. a moving average or one moving average vs. another.

But most moving averages are lagging indicators. While they are great at identifying past market behavior, they have no predictive value. The higher level moving average is the Predictive Moving Average (PMA) used in the VantagePoint trading software.

With VantagePoint’s PMA, six days are still averaged, but day five and day six are predicted. This minimizes, if not totally eliminates, the lag. Now, the important key here is that the two days of predicted data are derived from the ongoing “under the hood” work of neural networks and intermarket analysis. Vantage Point takes technical analysis to a whole different level.

Moving Averages and the Importance of Technical Indicators

Momentum Trading Indicators

Traders are obviously interested in prices and how they change over time, but they are equally interested in measuring how fast prices are changing – the momentum of the market. Is the velocity of a price trend increasing or diminishing? Does this measurement suggest anything about future price direction?

Momentum is simply the difference between prices over some period of time. What distance does price cover in what amount of time? A price at any given moment – $42 for Microsoft stock (MSFT) for example – is just one price and doesn’t indicate whether prices are moving up or down. If the price rises $2 in one day, a trader now has a distance and a time to compare with previous price movements and arrive at a momentum value.

Momentum and Trend Trading Indicators Combined -MACD

Momentum indicators are often combined with trend following indicators such as the Moving Average Convergence Divergence Indicator (MACD).

The indicator consists of a MACD line, a Signal or Trigger line, and a Histogram. The MACD line is typically calculated as a 12-day Exponential Moving Average (EMA) minus a 26-day Exponential Moving Average (EMA). The Signal line is typically calculated as a 9-day EMA of the MACD line. The difference between the MACD line and the Signal line is represented by the Histogram.

Signal line crossovers are the most common usage of the MACD indicator. When the MACD line crosses above the Signal line, it could be viewed as a bullish crossover and suggests the trend has turned up. When the MACD line falls below the Signal line, it could be viewed as a bearish crossover and suggests the trend has turned down.

While the traditional MACD can be a valuable indicator, it is still lagging. However, the proprietary Predicted MACD in VantagePoint utilizes a 20-day EMA and a 10-day EMA, with a 9-day moving average of the two values as the trigger line to predict trend changes 1-day in advance.

When the Predicted MACD line crosses below from the trigger line, this predicts a possible reversal of the current uptrend to a new downtrend. When the Predicted MACD line crosses above the trigger line, this predicts a possible reversal of the current downtrend to a new uptrend. Another crossover indicator occurs when the Predicted MACD crosses above or below a “zero” line, which is the point where the values of the two moving averages that make up the MACD are equal.

Predicted MACD also defines overbought/oversold conditions in a market when it pulls away from the trigger line, suggesting the price of the market may be due for a correction that will bring the averages back together. Predicted MACD also spots underlying strength or weakness in a market when its movement converges or diverges from the movement of prices.

Trading Profit is Obtainable

The predicted MACD is just one tool, and as any trader knows, to be successful in the markets, you need to employ a confluence of factors. This includes strong fundamental analysis of the stock you want to buy combined with a cutting edge technical analysis tool like VantagePoint predictive trading software.

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Sweet Market Moves For Valentine’s Day

February 11th, 2015 by VantagePoint Software

Sweet February Market Moves

sweet market moves in february

In the spirit of Valentine’s Day we are taking a look at some recent sweet moves in the market. By analyzing the 25 market influences that are driving the price of gold, our software delivered a forecast 1-3 days in advance that would have allowed you to make over $14,000 profit with single contracts in just 2 trades.

It’s pretty easy to see how having the right Intermarket Analysis tool such as VantagePoint can be just what you need in your trading arsenal to get ahead of big moves and cash in on larger profits.

Fresh Market Moves Forecast Delivered Daily?

On January 29th VantagePoint Intermarket Analysis Software’s forecast predicted 1-800 Flowers ($FLWS) to go up and in just the last 8 trading days the stock price has risen 31.42% Talk about a quick and easy way to cover the cost of a card, flowers, candy and dinner for your loved one!

These Stock Market Moves Will Make Your Heart Flutter

We also take a look at Canadian Solar ($CSIQ) and how the accurate stock forecast indicated an upward movement on January 24th. If you jumped on this trend at the right entry time, you could be looking at a gain of almost $8 per share in just 11 trading days. At this point you might be asking yourself – “How can this be mine?”

Don’t kiss another trading opportunity goodbye!

If you missed these moves, chances are you’re missing a whole lot more. See our recent forecasts for Netflix ($NFLX) and Lululemon ($LULU) here. Outdated indicators or free tools simply won’t provide you with the accuracy or the right timing to be ahead of the market and in trades before they take off. The fact is you are leaving money on the table. Tell us what you are trading and we can show you how this technology can improve your trading right off the bat.

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Analyzing Markets from a Global Standpoint

February 5th, 2015 by VantagePoint Software

Analyzing Markets GloballyIntermarket relationships became far more complicated in 2014. Let’s consider some of the major economic events that occurred:

  • Oil’s precipitous drop in price to below $60 a barrel
  • The European Central Bank’s announcement of negative interest rates
  • The Federal Reserve moving away from quantitative-easing
  • New all-time highs in the US equity markets

All of these events, as well as a confluence of other global factors, have drastically altered existing market relationships. This requires a paradigm shift for intermarket analysis where market trends are no longer viewed in isolation.

Analyzing Markets – U.S Dollar

Take the relationship of the U.S. dollar (USD) to equities and metals. A little over a year ago, those following this relationship were quite certain that there was an inverse correlation. Well, until that was turned on its head of late, and they began to trade in tandem. As we now have seen, the relationship between the equities, metals and USD have gone through a seeming transformation, leaving many stunned and scratching their heads in disbelief.

The takeaway is that markets and individual equities now have to be examined in the context of the evolving global economy. Many traders now understand that the evolution of technology has led to a highly connected global market; the problem is that most mass-marketed trading software programs are still using outdated technical analysis which ignores these important intermarket relationships. This method of analyzing market trends in isolation will result in misinformed trades and thus a loss of profit.

VantagePoint Trading Software is the exception. This software analyzes markets using a neural network process to identify which markets have the most influence on a target market, then produces a set of intermarket data to generate predictive indicators for short-term price trend forecasts for the new market realities. This data gives traders an edge on the market that can’t otherwise be obtained.

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