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Cliff,
A reactive system, ie a system we expect to react under some
conditions known from the past experience, ie a system we predict its
reaction, ie a predictive system.
As long as stockmarkets are not deterministic sets of data,
prediction will be the path from A to Z.
Of course, prediction has a lot of names, a lot of shapes or colours,
but, it always remains the same : Our ambition to conquer the unknown
next moment.
You may tune your trading systems to the future, try to be ahead of
your time reference and then, it is a relativistic causatum, the
present will be an event of the past.
It is not always easy, we do not see a perfect eclipse everyday, but,
when it comes [supposed you are there] it is magnificent.
You need to be there, when the prediction moment is mature and take
the money and run.
Run to the next space-time position and wait, preparing your best
tools.
The next moment will be unique. Whish you will be there, else, some
other time perhaps.
Dimitris Tsokakis
>
> A couple of comments on NN(Neural Networks): They try to train
> themselves to find predictablilty in the data, the only problem
> is that the price action is not a predictable function, this is
> why they fail. The same may be said for optimization, it will
> seem to work on past data, but if the basic trend is broken
> then the optimization fails. It boils down to, how to predict the
> future.
>
> The only time you have predictablility is when you find
> the parameters of a trading system that is being used to
> influence the price action. The program traders are very
> careful not to tip their hand, so others can see what they
> are doing. NN's would sniff out their actions because they
> could be predictable. Some writers claim this is institutional
> or fund traders, but even these folks don't like to tip their
> hand.
>
> I have trading for a very long time now and have seen all
> sorts of markets. I have learned the hard way about predictability.
> Everbody would like the Holy Grail to be some sort of simple
> function.
>
> Do NN's have value, sure they do, if they are used to discover
> predictibility. The time frame you chose in your comment is a
> test of this predicablilty because of the influence of external
> functions. The basic question is should a system be reactive
> or predictive. We can progam a reactive system, but I have never
> had much success in programming a predictive system.
>
> Cliff s
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