Occasional comments on technical analysis investing, evolutionary computation, genetic programming and the Genetic System Search for Technical Analysis program.
The investment market moves continuously. Opportunities for profit appear regularly. If you're spending time developing a trading system, you are missing these prospects. What is your development time costing you?
Modern techniques such as the algorithms employed in Genetic System Search for Technical Analysis shorten the path to active trading. Take advantage of the tools available. You don't even have to use the fastest machine with four monitors arrayed in front of you. Leverage the power of the computer.
Nothing crystallizes the mind like money at risk. Once you are competent with the mechanics of trading and your software tools, the continuation of artificial paper trading may even be detrimental. Put real money on the line even if it's just a token amount. The unique mental processes involved in a real trade will strengthen your abilities.
Investing is primarily a solitary enterprise, even if you are part of a trading group or in a corporate environment. In an effort to stay on an even keel and to gain exposure to novel ideas, participate in the online community. Monitor investment forums and blogs. Keep a log or diary of your thoughts and trading activities.
Each opportunity for financial gain bypasses you if you do not act on your trading signals. The market doesn't know you exist and will not wait for you. If you act on each trading signal without fail, it will be easier to eliminate the human tendency of procrastination.
Many investors study the movement of and the statistical properties of market prices and volumes and base their decisions upon such technical analysis.
The construction of an successful investment system is often time-consuming and must be performed periodically as market conditions change. Furthermore, a system which works well for one stock may not be profitable for another stock.
Because of the number of possible indicator terms multiplied by the number of variations of each indicator, a genetic programming search may be efficiently employed to quickly find investment systems.
The genetic programming engine inside the Genetic System Search for Technical Analysis program uses several operations to arrive at a set of technical analysis trading rules.
In the construction of technical analysis trading systems one might use a brute-force or exhaustive search for the optimized set of rules. You select a list of indicators and, for each indicator, the range of possible values.
As an example, one indicator would be the simple moving average. There are versions of that average for the open, high, low, close and volume values at each trading bar. Each of those versions must be tested with a range of periods. One might build tests for each period from 5 to 300 bars.
All indicators must be tested with each of the possible variables. That's everything from the 5-bar, simple moving average of the open to the 300-bar simple moving average of the volume. Now multiply that by the number of bars in your stock's data file.
So far you have built the tests for just one indicator. The number of test combinations quickly explodes.
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