Five Trading Questions Every Trader Asks (and how we’d answer them)

January 12th, 2017 by VantagePoint Software

Trading Questions

As we ring in another new year it’s important to keep in mind that nothing changes as much as it remains the same. For example, political power has changed, but the themes remain. Republicans will continue to attack the usual topics including the Dodd-Frank regulations that curtail the healthy financial industry. Democrats will continue to attempt to outmaneuver Republicans in an attempt to stop them.

The turbulence from the political battle will no doubt affect the market (another yearly constant) and cause angst for everyone involved. But, more likely than not, the five trading questions we’ve listed below is what’s really going to keep Joe Q. Trader awake at night in 2017. These trite realities will wreak more havoc on you than politics will on the market. At least it will if you don’t learn one simple thing – you can do nothing about the external realities affecting the market. But, you can do much about the internal forces keeping you awake at night. Nothing changes as much as it remains the same. So without further ado, here are five trading questions traders commonly ask and useful mottos to remember when facing your most common trading angst.

5 Common Trading Questions

Did I make the right trade?

Second guessing your trade is useless. If you researched with forecasts that highlight trend changes and set the trade up properly, you have a high-probability trade with a well-defined in and out based on a reasonable profit/loss. Let it ride. Motto: The trade is made, move on.

How could I have been wrong?

Trades go south. Figuring out what went wrong is important. Beating yourself up over it after the fact is not. Learn from those mistakes and protect yourself with the proper tools. VantagePoint provides a clear crossover on its charts indicating trend changes that can be used to improve your timing on entries and exits.  Motto: The trade was made, move on.

Check out this video to see how VantagePoint identifies trend reversals before traditional traders even know what’s going on.

Why did I lose money?

Again, trades go south, which usually means a money loss. But, this is an integral and necessary part of the game. No one wins all the time. The trick is winning more than you lose. See your losses as learning opportunities, nothing more. Utilizing tools like VantagePoint’s Intelliscan will help find trades that are in a better position to move in a given direction. It can also help you identify markets with high volatility that you can avoid until the market becomes more favorable. The goal is to improve your win/loss ratio, not worry about your past losses. Motto: “Fogetta boud it …”

What will the market do tomorrow?

Truthfully, more pundits/analysts get this wrong than right. The market is the collective conscious of millions of humans, so consistently predicting with accuracy the daily behavior is unlikely. VantagePoint’s patented neural networks analyze intermarket relationships and predict market movements with up to 86% accuracy. Utilizing technology will help you sleep at night because it doesn’t have to. Motto: Technology is your friends, let it help you.

Should I even be trading?

For many beginner traders, this question will cause the most sleepless nights. Second guessing your trades, beating yourself up after a poor decision, fretting over losing trades, and betting on what others think the market will do tomorrow will all lead you here. Master the answers to trading questions 1-4 and you are less likely to end up contemplating this question. Something to also keep in mind; trading, like any other skill, takes time to learn. Stay calm and learn from your losses. Utilize the tools available to maximize your potential. Do these things and the answer to question five will more than likely be yes. Motto: Do it right, sleep at night.

Trade confidently with the help of VantagePoint

Don’t leave yourself unprotected and answering these trading questions on your own. Sign up today to receive a free market forecast from VantagePoint and see how VantagePoint can help make 2017 your most profitable year yet!

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Greece Crisis and the Effects on Global Markets

July 2nd, 2015 by VantagePoint Software

greece crisis

It’s safe to say the entire world is feeling the effects of the current Greece Crisis. Regardless of which markets you trade in, there is no doubt this event has caused increased fear and uncertainty for most traders.

The DOW dropped over 350 points on Monday – if your current trading strategy is to follow in the footsteps of what has already taken place then chances are you got caught off guard and ended up on the wrong side of the trade.

VantagePoint’s proprietary market leading forecasts were ahead of this dip and gave traders using the technology the insight that something big was coming. How is this possible? By utilizing Intermarket Analysis and a Neural Network process, VantagePoint identifies and analyzes 25 intermarkets that drive each forecasts market and to what degree the impact will be.

In the video above we take a look at recent forecasts for stocks, ETFs, Forex pairs and commodities that show not only the impact of having this knowledge ahead of time but also just how connected each of these markets really are.

With VantagePoint, you don’t need to worry about adjusting your strategy based on timing, market or any other outside factors. Trust in the 86% accuracy and you’ll find yourself on the right side of the move more times than not.

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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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Trading Strategy – A Guide to Market Correlations

March 10th, 2015 by VantagePoint Software

trading strategy

Financial markets rarely trade completely in a vacuum. What happens in one market frequently spills over and may drive other markets’ movements. For traders using predictive market software like VantagePoint, the intermarket relationships are analyzed, evaluated and weighted to forecast price trends.

Still, it’s important to understand the theory behind intermarket relationships as they apply to complex market conditions. Because what you may have learned in your college economics course may not apply to trading today’s correlated markets.

Correlation Basics

Without getting into a major statistics lesson, a brief look at the basics of correlations is a good idea. First, a coefficient of correlation is a number between +1 and -1 and represents the degree of statistical interconnection between two assets. A correlation of +1 indicates a perfectly positive correlation and means that two assets’ prices move in perfect tandem. A correlation of -1 expresses a perfectly negative correlation and shows that the two assets’ prices move perfectly inversely to each other. A correlation of zero means the two assets’ price moves are statistically uncorrelated, meaning the price movements in one asset have no statistical meaning for the other asset’s price direction. Correlations between +0.3 and -0.3 are typically viewed as weakly and unreliably correlated; coefficients of +/- 0.5 are considered significant, while coefficients of +/- 0.7 are considered quite strong, statistically speaking.

Correlations are calculated based on a number of observations or periods, such as weekly, daily or hourly closing prices. As such, one of the most important elements to keep in mind when interpreting the significance of any correlation is the number of observations used in the calculation. A correlation calculated using only 20 or 30 periods is likely to be of minimal reliability, but coefficients relying on 100 or more observations typically have a high level of statistical significance and reliability.

Why Do Correlations Exist?

The longer answer is that correlations exist as a function of time and, most important, a series of fundamental economic relationships becoming elevated for a period. The key with the time component is that just as time passes, correlations come and go, lasting anywhere from weeks to months or years. And they constantly vary in strength. The point of the fundamental economic relationships portion is that there is nearly always a real world relationship between assets that account for much of a correlation’s existence. Those relationships are in turn driven by changing economic and market environments that adjust over time. Another important reason behind the frequent appearance of intermarket correlations is you! The traders who actively speculate, hedge and invest based on correlations, whether intuitively or programmatically, generate a self-fulfilling feedback loop in the process.

The downside here is that when correlations break down, many traders are on the same side, exacerbating the resulting divergence and market fallout. That’s why it’s important that your trading software not only uses intermarket analysis, but also employs predictive indicators to forecast trends.

Short Term Trading and Market Correlation

Most statistically significant correlation studies span long time horizons. Unfortunately, they provide little reliable insight into shorter-term price relationships, which is where most traders focus. The result is that ostensibly time-tested relationships can, and frequently do, break down in the short run (intraday or during a few days). As a result, traders employing correlation based trading strategies need to remain especially alert to short-term divergences in addition to longer-term shifts in the underlying economic environment.

Again, enter the importance of software like VantagePoint. Relying on its proprietary, patented technologies that apply neural network pattern recognition to intermarket data and its patent-pending technologies that then create leading indicators, VantagePoint helps spot the short term shifts in market correlations.

Still it’s important to remember that correlation is not causation. Just because two assets show a degree of correlation does not mean that movement in one is necessarily causing the other to change. Especially on an intraday basis, it is critical to have a sense of which market is leading and which is following. The primary catalyst will usually be some piece of fundamental news or data, but you need to find that out and discern which market is dominating at any given moment. Technical analysis of correlated markets is also required, as the lagging asset may suddenly play catch-up if it breaks an individual technical level.

This requires that your technical indicators to be leading and not lagging!

Correlations are irrelevant if your Technical Analysis Can’t Keep Pace

Many technical indicators, such as moving averages, attempt to filter out short-term price fluctuations so that the underlying trend can be observed. A side effect of doing this is that the technical indicators tend to lag behind the market. Such technical indicators are referred to as lagging indicators. This lag effect typically causes the trader to respond late to market changes, resulting in lost profit opportunity and risk of increased losses.

Still, moving averages are very popular because they smooth out the movement in prices, are easy to calculate and understand, and depict the underlying trend.  But, the lagging nature of moving averages has always been the bogyman that has kept them from realizing their true potential.

VantagePoint employs proprietary computer processes which address these limitations and overcome the lag effect through the development of methods, systems, and devices that combine both actual and predicted data derived from the application of neural networks to intermarket data found to be most influential on each specific primary market.

In one aspect of the invention, an algorithm is used to integrate the predicted data with actual technical indicator values to create a hybrid technical indicator that overcomes the lag effect that was previously thought to be an inherent aspect of using technical indicators.

Again, market correlations don’t move markets, a confluence of factors do and this requires state of the art, predictive technical analysis for traders looking to capture these relationships.

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Market Forecasting Methods for the New Age of Trading

February 26th, 2015 by VantagePoint Software

Are your Market Forecasting Methods Ready for the New Wave of Trading?

market forecasting trader

As a trader you have probably thought to yourself “How can I get my moving averages to be predictive instead of lagging?” In other words, you’re looking for ways to improve your timing so that you stop leaving profits on the table. The answer could be as simple as reevaluating your current market forecasting methods.

Moving averages can be modified to incorporate intermarket data and even constructed so that they become leading, rather than lagging, indicators. This step ahead in crucial in today’s market forecasting as it gives traders the edge needed to get ahead during times of low confidence or volatility.

This can be accomplished in a number of ways, one of which is through a mathematical tool called “neural networks” that can be used to forecast moving averages based upon both single market and intermarket data.

Through the use of Artificial Intelligence, these neural networks function like a brain to “learn” relationships within and between similar networks to recognize hidden patterns and make predictions about the market with a high percentage of accuracy.

neural networks chart for market forecasting methods

This technology is employed by VantagePoint to generate Predicted Moving Average tools that utilize neural networks and intermarket analysis to smooth out the price trend. This technologically advanced approach turns what has traditionally been a lagging indicator into a leading indicator, a highly accurate predictor of short-term trends.

By obtaining a 1-3 day jump start on a trends direction or price, traders can enter and exit positions with a high degree of accuracy, proven up to 86% with the use of VantagePoint’s patented science. Don’t take our word for it – listen to what these other traders had to say about their experience with the software.

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Using Neural Network Software to Improve your Oil Trading

February 10th, 2015 by VantagePoint Software

This Neural Network Software is Helping Traders Cash in on Oil

Even though you are benefiting at the gas pump, you may be frustrated to have missed profiting from the tremendous downward move in Crude Oil futures. Still, market volatility should continue well into 2015. So it’s time to ask yourself – is scientifically proven Neural Network Software exactly what I need to improve my trading results?

Neural Network Software Predicts the Price of Oil

So how do traders predict where Crude may be headed? 

It is helpful to view the commodity’s drop in another context. Analysts have repeatedly debated whether the 2014 collapse in oil was at the hands of supply concerns, or decreased demand expectations.  However, the answer might be simpler than supply and demand.  Another explanation could be that the value of crude oil hasn’t really changed relative to other assets, but because the world prices crude in dollars, the price adjusted to account for action in the currency markets.  Simply put, a majority of the drop in crude oil could, arguably, be explained by a stronger dollar.  In essence, when the dollar is stronger, it requires fewer of them to purchase crude oil.

It is these type of intricate intermarket relationships and economic analysis that even the savviest traders can miss. What’s needed is a process to consider all inputs and then predict future outcomes.

Enter Neural Network Software

These interconnections can’t be understood or adequately visualized on a chart. The only way to grasp the significance of the effects of related markets and quantify them in a systematic manner is through the use of sophisticated, complex mathematical processes such as ‘neural networks’, a mathematical approach ideal for finding hidden patterns and relationships in global market data’.  Neural networks are a sub-category of the mathematical discipline known as ‘artificial intelligence.’

VantagePoint Software employs neural networks to help traders of all levels. The complex calculations are done for you so you can feel confident trading volatile markets like Crude Oil futures because you have a significant edge on traders employing traditional technical analysis. This advanced trading technology is exactly the right tool to increase your confidence in unknown market conditions.

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