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Mar

2019

Bifurcations, minority reports and r.Virgeel’s jargon

I have published the usual monthly update and in the post I have included a significant minority report. One subscriber was surprised by the existence of a “minority report” and asked how does it work. It is an interesting question, that I cannot reply exhaustively, without revealing some well-kept secret about the building of the model. But, I can try to explain.

Like any software tool, r.Virgeel’s code is plenty of variables. One of my long term efforts has always been to try to reduce the parameters of the model to the minimum, to avoid any possibility of over-optimize the networks. Neural networks have their ability to generalize, inducing replies out of sample, inside their realm of comfort.

Finally, I arrived in the latest versions of the model, to just one variable. The one and only that affects the model sensitiveness. Let’s call it sensibility. Low sensibility produces more volatile analysis and indicators; higher sensibility produces results more stable, day by day. If sensibility goes too high, r.Virgeel gets stuck for long periods, inside a sort of trance. There is an interval of best response.

I’m interested in a reactive and adaptive response, so I usually select a value of sensitiveness inside the well-tested range and change it only occasionally. And I also get a look to the forecasts generated with different sensitiveness and if I find a particularly persistent minority report I share it with the subscribers, to warn of any possible incoming event.

Also, consider that, to work, neural networks must be trained. Training means that experience is transferred into the network and what sorts out is that very similar conditions are trained for opposite outputs. It is not an error or a limit, it is inevitable: every market is an alive entity and r.Virgeel brews its reports from a huge correlation matrix between dozens of markets. Altogether, it’s gigantic. Bifurcations are inevitable, are part of the alive thing. Bifurcations and minority reports are different aspects of the same datascape. I’m working on this aspect, but it a long way. Anyway, bifurcations have reduced their aggressiveness and really interesting minority reports are rare.

If you come from technical analysis, you are used to consider the price bars as your primary source and you are used to self refer your data to generate some significance. Inside the model, the SPX is absent from the correlation matrix, being placed on the learning side. Yes, it’s different. The whole configuration of dozens of other markets generates the SPX inside the brain of r.Virgeel – by the way, the most relevant markets are the biggest, not surprisingly. The process is known as “pattern recognition”: find where some similar data is in the archive and learn from it to process the current moment. Once the model works, and it has been real-time tested since 2013, you, me, we are not requested to do much. Through the indicators, r.Virgeel gives a variety of different reading of the present status of the market, designed to be in reciprocal confirmation.

The use of the output we get from r.Virgeel is up to each one of us. I’m sure everyone uses it differently, with different time horizons. The a.i. tools offer a huge potential to enhance many trading styles. At the moment I’m testing the intraday use the FastTrack indicator and the results are really nice. The FastTrack levels on the intraday chart help me to have an immediate frame and it works from 4h to 5mins. You do not have to use r.Virgeel in a specific way: find how it fits your plans.

A final word about the jargon: I understand that sometimes you may be confused by technical terms, but I must use them to try to be clear. Artificial intelligence has a plethora of dialects and terminology, it’s exploding just now and I’m sure that in the next future many concepts will be of public domain.

Feb

2019

The current wave viewed by r.Virgeel

How di r.Virgeel acted from the last turning of the current wave?

This is the forecast chart brewed on December 31st, 2018, when the model turned positive at the end of the correction.

Since then, r.Virgeel has been long, with some indecision here and there, always solved in one bar. A long bear traps trail that has been correctly and smootly followed from 2507 to 2792 today (+11.3%) and much higher, probably, in the immediate future. This first positive forecast was supported by the New Year’s Eve monthly update and from the progressive weekly forecasts.

Following the model, we had no doubts that the positive side of the market was – and is – the long one. What r.Virgeel seems to preview for the coming future is a crazy springtime, times for hard skinned unbiased traders, times plenty of opportunities. Then, we will probably take a rest, jumping on a giant roller coaster that will frighten you crazy. Be prepared. Stay tuned.

Feb

2019

January checkout

During the whole month of January I have strictly watched out the D-FT behavior. All the obstacles have been easily bypassed by the comparison of the other indicators. r.Virgeel is working well and I’m preparing a new enhanced chart. It will be ready in a few days, if I can solve some stupid (?) problem of auto-execution.

The long term issue of the easy flipping of the daily forecast (linked to the evidence of continuous bifurcations in the data structure) seems now reduced, usually no more than one bar and when the market goes overscale. Using the variety of indicators provided by r.Virgeel, it’s easy to stay on the correct side of the market. Other than the medium-long term investing, I’m now testing the fast realtime trade. It’s not the first time, but the D-FT has introduced a new fashion in the intraday trading I’m sensible to. The two D-FT levels are very effective in helping to determinate the realtime dynamic as market moves. I’m testing the platform and setting up the program, it’s a game that I’ve pushed out from already.

Most of the indicators have been revised, with minor modifications, and the training has been revised completely for all three time frames (daily, weekly and monthly). In my personal opinion, r.Virgeel is in its optimal shape, for the work I can do and for the quality of the output.

I’m also re-approaching the nebulous and elusive theme of cyclical analysis reading about Hurst cycles. No big enlightment, yet. Some improvement, maybe. The thing is there, I know, but still no shape. Let me be clear: I would be very happy to have a totally different non-neural system that confirms r.Virgeel’s market readings, not that I do not trust r.Virgeel, but a confirmation is better, isn’t it?

Dec

2018

Forecast/ability 2

In the previous post “Forecast/ability” I did refer to the daily a.i. forecasts and I showed the results of a long and extensive research on the quality of the response of the model.

But when we come to the weekly and to the monthly forecast, things change radically and for the best. Undoubtedly, weekly and monthly bars undergo a reduced “noise” and express better the global consent of the partecipants to the market activity. Market is fractal in nature and I have not an explanation for why it behaves differently from daily to weekly and monthly time frames. Maybe because it reflects the attitudes of different categories of actors (investors have a totally different approach to the market than daytraders or position traders). Anyway this is what comes out years of observations of the forecasts produced by my model.

Just as an example, this monthly forecast chart has been produced exactly one year ago, on 5th of December of 2017 and shows how r.Virgeel forecasted correctly the October 2018 correction, ten months in advance. Astonishing, uh? Consider that the monthly model is a long term database of financial and econometric data, so the detected patterns are not only related to the market activity, but also to the underlying economic activity.

(The right part of the chart has been cutted, for respect to paying subscribers, as it refers to current market expectations and it is still valid).

Here another example, from the weekly model, published to subscribers on the 3rd of March 2018: the deep and scary correction was shaking the markets and r.Virgeel correctly forecasted that in 4 to 5 weeks the S&P 500 should reverse (not reaching the previous low) and go for new all times highs, as it did.

Quite obviously, these forecast on the long term side are not much interesting for very short term traders, but they may be invaluable for position traders and investors, that have a global vision of the market totally depurated from the biased news and the so-called experts opinions. hese are not opinions of any kind, they are the result of pure brute force number crunching

The psychological advantage of these knowledge is actually the first and best result: less stress, better decisions, more returns on your investments!

Dec

2018

Forecast/ability

Following my previous post “New Tools at the Horizon“, one question was twirling in my mind: why the stock market is forecastable, but the forecasts are not affordable?

The forecastability of the market is an evidence, because if it were not – being it just a random walk – there would not be the possibility to have an output from the neural networks that manage the forecast process. For a neural network to work, there must be some sort of structure inside tha data that can be used to produce the forecast/diagnosis.

This chart shows a blind neural network, unable to recognize any pattern in the input data.

And this hidden structure is present indeed inside the market data, otherwise r.Virgeel would be totally blind and dumb. This is a sample chart of a blind network: not structure is evaluated and the output is just an array of zero values.

The fact that we humans do not recognize any structure in the data is irrelevant.

So we have a (hidden) structure, the neural tools recognize it, but the output ranges from nicely precise to totally incorrect, without having the possibility to know how much the result is matching the real future movement of the price.

Now, I begin to see the light.

The price of a financial instrument is the result of an ask/bid process, where a multitude of actors (I’m considering liquid markets with a wide audience) buy and sell that instruments under the suggestion of a personal forecast that the price of that instrument will rise or fall in the future. Every partecipant to this activity actually does a personal forecast every time he/she executes an order. So, the resulting price is the sum of all the collective forecasts and, at the end of the day, this collective forecasting process generates the push that contribute to move the trend.

[revec2t text="Every partecipant to the market activity actually does a personal forecast every time he/she executes an order."]

In other words, every attempt to forecast the market is a process of forecasting a collective forecast activity, a meta-forecast: no surprise that somewhere in the process one or more dimensions are lost and the result is probably something similar to a shadow, that let you recognize the original shape under certain conditions and totally mistify the original shape under other conditions. When you project a multidimensional event in a field that reduces the dimensions (think to a 3d object projected onto a plane) you lose a significant portion of information and you may generate a lot of ambuguity.

A 3d object projected onto a 2d planes may generate very different shapes

Now, the forecasting process is just a minor side activity of r.Virgeel, even if it is the most appealing and mind-storming: r.Virgeel is mostly a diagnostic tool that reads current data and find historical patterns that match the best market position available, with a significant success.

Dec

2018

New Tools At The Horizon

In past September, I designed a new weekly model and some new tools to investigate more deeply the quality of r.Virgeel’s model response. The results were really astonishing and have started a real revolution inside my approach to artificial intelligence and investing.

Three months later, after a huge amount of testing and experiments, the new weekly model is almost abandoned (well, it’s alive, partially), but many of the discoveries have been transposed in the “old” model and I may begin to share the results of the research.

Bad News First

I’ve always considered the Future Bars as my best benchmark: 24 bars (either daily, or weekly or monthly) in the future to map the “less improbable” path that the S&P 500 will follow in the coming future – it’s a big challenge, indeed! One of the new tools I’ve developed lets me test the behaviour of r.Virgeel in the past and a lot of surprises came in.

chart n.1

chart n.2

The response of the daily model is very variable, ranging from the nice precision shown in chart n.1 to the total failure shown in chart n.2, but what was more surprising was that r. Virgeel is much more precise during wave development and during intra-wave correction and totally wrong, usually, at turning points. I still have no idea of why it is so, but I’m sure it is a direct consequence of the fact that the market is a live thing, a really special living organism.

At first, this was a big delusion to me! But it helped me to separate the a.i. forecast output from the a.i. diagnostical ones (or the main other indicators that allow r.Virgeel to decipher the current market condition and to take position), that are much more affordable and precise. For the first time, I realized how the two things are deeply different in nature and how our expectations must be different on these two aspects of market analysis.

Then Good News Arrived

Then something surprising happened, and it was a revolution. I was revising hundreds of sample charts, when r.Virgeel suggested me to note its recurrent and inesplicable behaviour at market turning points: the FastTrack indicator took shape in a few hours and it is one of the best goals I’ve achieved, ever.

I was a bit upset, at the beginning, because I am a medium to long term investor and not a short term trader, while the FastTrack – it was clear since the beginning – is a tool for short term positions. Then I put it at test, as usual real time test, from its first long position on 30th of October: since then it has completed three swings up and three down, and is now in its seventh position (long), collecting a gross profit of 302 points (or 11.3% profit) from closed positions plus an open position that is gaining 108 points more, making the total profit up to 410 points or 15.4% of the initial capital. Of the six closed position, two were losing: one (long) was down 8 points and the other (short) 4 points.

It is a gross and theoretical profit, that must be adapted to the instruments used to invest, to position costs and slippage, but considering any possible drawdown, it is reasonable to say that you could have had a before taxes return of more than 10% in just one month, during a very difficult market condition (a deep correction inside a rising market). I will publish the complete positions record at the end of the public diffusion of the FastTrack, in about two weeks, but I’m sure that the readers that are following the blog are well aware of the goodness of the new indicator. It is precise, responsive, objective and totally deparametrized.

Expanding The Analysis

One of the consequences of the introduction of the FastTrack indicator is that r.Virgeel will soon be able to apply its model to financial instruments other than just the S&P 500: I’m working on it and I hope to be ready for New Year’s Eve to produce the FastTrack levels for the DowJones Industrial Index and for the Nasdaq Composite, and then for main stock market indices worldwide (DAX, FTSE, HSI, N225, …) and also for EURUSD, GOLD and others. I will need some time to prepare and verify the framework and the new models, and to modify the website to accomodate all these new informations – it’s a nice challenge – but the result will be a larger set of possibilities for us to approach the investing selection.

[revec2t text="r.Virgeel will soon be able to apply its model to financial instruments other than just the S&P 500"]

As a consequence of all the above, I have also realized that the standard one year subscription plan that the site offers since it was born is probably inadequate to host short term traders that have a totally different approach to the market, so a new one month subscription plan is now available, to let you test and evaluate if the r.Virgeel collaboration fits profitably with your trading habits.

A Final Warning: EURUSD

As I told you, the new weekly model is in stand-by, but I regularly update the database and verify its response to updates.

Today, it produced this chart for EURUSD, signalling a possible waterfall event with an Euro crash in the coming weeks, pointing to 1.035/1.05 area. As the European crisis is looming (Italy’s budget, France turmoils, Deutsche bank crashing – is it enough? ), the Euro seems destinated to pay the bill at a dear cost.

UPDATE – It was not yet ready to crash, but at moment the EURUSD is not in good shape anyway.

Nov

2018

As you asked: Intraday

“I wanted to ask you if you ever thinking about making an intraday trading system.” (W.M.)

In the past, I already tried to build a real time version of the model, but it has some limitations: it’s hard to have quality data for a large set of instruments without “holes” and back in time enough to cover a long history. The access to the actual real time market data is compulsory. It’s a huge quantity of data.

It would require, to be done correctly, a very consistent investment in hardware, data feed, external coders, etc.: such a service should be “always on” and multi time frame; all considering it’s not in my possibilities.

In some way, even if I try to approach the analysis as abstract as possible, how spxbot is shaped reflects my attitude to the market as a good long term investor, a mediocre swing trader and a bad, no: awful, short term trader.

Anyway, if you like to follow my advice, try to use r.Virgeel’s suggestions to shape the frame, the long term action of the maket below your intraday trading. I’ve done it for about six months, last year, with nice success, using a CFD account and trading the 15m to 1h charts with a momentum indicator. Using the r.Virgeel’s outlook, I traded all the waves in the direction of the underlying trend and never the opposite.The FastTrack indicator was not available yet, it has just few weeks. It is not designed to work intraday, well, it is not designed at all. It actually is the real first r.Virgeel’s contribution. FT seems to work well as a trend follower on a short daily basis. It tends to stay on the trend, bat can reverse in two or three bars, just following mr.Market digestion process. So, the FT indicator can show quite reactively how the tide is flowing and you can program your trades consequently.

I’ll give it a try.

Nov

2018

First Weekly Fast Track

I’m working on the weekly version of the FastTrack indicator and you may see it in action in the following chart.

It has reversed to negative (short positions) at 2919.047 / 2905.918 (crossed twice 6 and 5 weeks ago), and then to positive long positions last week at 2682.437.

This weekly version is brand new and my hope is that it can help catching longer positions than the daily version.

For next week, we have support at 2703.378, that, if broken, will reverse to negative. Second support lies at 2633.294 and, if broken by week close, may mean real danger ahead.

As for the daily version, I will publish the weekly FastTrack for free for some weeks to come, so that we may observe how it behave in real time.

Stay tuned!

P.S. I want to thank all new free subscribers to updates and newletters, your number is booming and it is really a pleasure to see your interest.

Thank you!

Oct

2018

The new FastTrack indicator

UPDATE 2018/12/14

Today I’ve closed the free alpha testing of the FastTrack. It is fantastic! All the spxbot readers have seen in real time it’s performance. Now, to be clear, the numbers.

[table id=6 /]

Operations were simulated on a CFD platform. I have stopped the last (virtual) operation today in the morning (CET), with the SPX at 2623. Prices subject to a bit of slippage and to personal triggers. This was not an automatic testing, it was, as usual, a real time testing. No account for expenses or taxation. Even if your apply your more pessimistic view and consider a wider slippage, there is a huge margin for a very consistent profit.

This is the performance during the first month and a half, during development. Stellar! Now, development has completed, and subject to the refine process. Subscribers have access to daily reversal D-FT levels for the following markets:

S&P 500
Dow Jones Industrial Average
Nasdaq Composite
DAX Frankfurt
SHC Shanghai
GOLD
OIL WTI

The FastTrack indicator, an r.Virgeel artificial intelligence tool, is a totally de-parametrized neural indicator composed of price reversal levels that confirm or deny the short term trend in action. The basic assumptions are:

that the market may go any direction any time,
that exceeding the traced levels is a clear sign of continuation or reversal of the trend
the area inbetween the levels is a sort of “neutral” area that does not give any relevant indication.

Let’s see the simpler version in action, to better understand it’s behavior:

Here you see the levels for the latest days, from the top of Oct. 3rd to Oct. 19th., 2018
Levels are generated for the next day/bar. We can easily identify three key days, in the chart:

(Please note, the above images are from the very first development stage)

In the shown days, the coming reversals are clearly oulined by the relative levels: as next day the S&P 500 crosses the levels, then the reversal is stated.

As shown in the last chart, for two consecutive days, the FT supports and resistences the FastTrack is calculated under two different conditions and so we actually have two levels that show the less improbable path of the coming bar.

I have sampled the FT all around the data (it’s a nicely long recording of the S&P 500) and the behavior of the new indicator seems very attracting. The FT indicator is not exempt from some false signals, but following strictly its action should reduce drawdowns to virtually meaningless.

The FT is also applied to weekly time frame. Follow the blog for updates.

How is the FastTrack built? r.Virgeel projects extreme levels into the coming bar. It makes a double projection, under two different (opposite?) conditions. His projections are usually quite precise and so the FT generate a sort of trend following channel. But the market is a wild beast and it is alive and loves to play sudden reversals. Let mr. Market play his game, and he will break the FT, either in the direction of the trend or reversing, because he is always exagerating and pushing over its limits. In some way, the FT is built around the psychopathological behaviour of the market. The FT has been suggested me by r.Virgeel and was unexpected. I nean, I did not designed it, I just refined the code to have a stable output.

Even if it has some occasional (and inevitable) false signal, the other r.Virgeel’s indicators are there to help confirm the trading action.

The FastTrack has been published for free during the first month and a half of development, from late October to mid December 2018, during alpha development and testing, to let us evaluate it’s performance and solidity, and it is now available only to subscribers.

Thank you for following and supporting!

[pt_view id=”7a3b622qrv”]

Oct

2018

Bifurcation at last!

If you’ve read here and there around the blog, you know I sometimes used the word “bifurcation” to indicate double exit situations, but I’ve never been able to show them, before.

Now I’m building a new tool and the results are plenty of surprises. One is the following chart:

Next day bar is forecasted quite correctly, but the second day ahead shows an evident divergence.

Its another confirmation that bifurcations exist and are part of the data, are encapsulated into the model matrix.

Sep

2018

Serendipity at work

r.Virgeel’s model is undergoing deep modifications, sparkled by the development of the new weekly model, that has made evident some before obscure aspects. Where there was a wood, there is now a vast pratery. I’m translating the modifications into the “traditional” daily model and, it’s early to say, it seems getting sharper. The experiments must always be reversed, so it is a slow testing, but with exciting results.

Things are getting simpler and faster. It’s a good point. Sharpness seems improving. Another good point. Synchrony between daily and weekly models are at highest levels ever seen. And this is very intersting.

If you have read around the site, you already know that the three models (daily, weekly and monthly) are maintained and calculated separately, without contacts of any sort. Totally indipendents. The fact that they go in synchro is poorly probable, evidently. I take this a good sign that we I’m moving in the right direction.

Great. Nice moment, nice words, but where is the meat? Where are we in this big mess that is the S&P 500?

Well let me reply hiding the r.Virgeel answer to the question behind the beloved Elliott’s Soup, or Elliott’s Wave Theory, that is pointing at the development of a fifth wave, on the following chart (by AdvGet). The total branch is well formed, the dynamic seems academic. We have just broke the previous (3) high, and we have a long accumulative phase behind. Rising highs and lows. All this preludes a strong move toward the top. The chart shows two targets, at 3000 and 3300. The first is very near and it will be a mediatic shock when reached. What? The Stock Market Going To The Stars!

To fully develop, the fifth must take in the newbies. They are the fresh meat that fuels the money draining that happens when large bull movements happen. Opimism will spread, soon, around the stock market.

Beware the day the very first title of the tv is “The Stock Markets Booms!”. That will be the day to get out.

Chart by AdvancedGet

Sep

2018

Going Forward

For many months, I’ve tried to put together the pieces to have a long term database, monthly based and with a huge history. I was moved by the progress of the monthly forecast, that I see sharper than before. No way. Data is largely unavailable. Very few series of mayor commodities and indices are out there, but very few indeed. r.Virgeel works well with more data. More data. No way.

Then I started to look at my beloved weekly forecast and I soon realized that I could enlarge the weekly database in time reducing its components. To make it simple, more data for less symbols. Mmh…

I hoped that data could go back some decades more, but I now have a new weekly database about 75% longer in time than the standard one. It needs a new whole ecosystem of code to work and the basic part is in beta development and running. More work is needed, but I’m very curious of all new code output, when it will come.

So, I’m rewriting the code once again and with a new database (DBMS), it’a game of traps and bugs. The new DBMS is slower than the standard one, but its tameness is great. Being slower, I have to rewrite the code optimizing every step, and this is good. It will take time, but then we will have a brand new weekly brain. Worth the effort.

This chart is the very first captured from the development. It is the training process feedback. the color code seems to work well. One of the enhancements is a better visual evaluation of r.Virgeel learning, an evolution of the Colored Bars. I try to be as impartial as possible and help r.Virgeel detect bottoms and top and generate optimal signals for operative triggers. Working on the past, it is not difficult, but sometimes tricky.

Another enhancement at the horizon is that r.Virgeel will no more be restricted to the S&P 500, but it will open to a batch of sperimental new subjects: EUR/USD and Gold will be the first. Before it was not impossible to obtain a forecast of other symbols, but it was quite complex, being the original project very SPX centric. Now it will be easier to test some new entries and see how they work out.

I wanted a huge monthly database and I will have a not-so-huge-but-larger new weekly model. At work, now.

Sep

2018

Mid-August Checkout

The following chart is the checkout for the forecast by r.Virgeel issued on 13th of August 2018 (red dot) after market close and actual S&P 500 bars.

Evaluating the Next Bars indicator, r.Virgeel detects the less improbable pattern of H/L/C (H/L bars charted here in Magenta) for next 24 bars, under current markets conditions.

The day 13th r.Virgeel flipped from neutral to Stay Long. If you want to consider the usual second day confirmation (that arrived) and enter Long on the opening of the third day, you were on the bottom bar.

Anyway, there is a retard in the initial reaction, but the market soon goes in synchro with the forecasted values. (*)

The first real bifurcation comes after 16 bars, but in the meantime we are on the third step at 2900/10. Here befucation means that real values and forecasted ones goes opposite sides.

I may note that r.Virgeel is quite good in arguing the coming short waves pattern. Highs and lows are nicely precise, if you think that they were evaluated on 13th and happened 9 and 13 bars later.Also, it detected the correct rising gradient.

I also would like to note that even if the global 24 bars comparison contains a high deviation error, the resulting pattern was a precious guide to follow the incoming days on the market. This is what I call to Know in Advance.

Since then, r.Virgeel has updated the outlook every day, following the incoming waves.

(*) A final note about tops and bottoms. It is my personal opinion that Mr. Market is stretching its extremes in both directions and to such extremes that you are convinced that market turned, yes, yes yes,… no. It is the way Mr. Market use to squeeze your capital and suck any drop from your fear. It’s difficult to manage, because part of the action is now on the ever awaken global trade, or overnight if you prefer. Tops and bottoms so take “strange” shapes, with gaps.

Sep

2018

The Value of Opinions

The markets are the places where opinions are transformed in money. Opinions are represented by numbers. In we consider the S&P 500, it’s numbers represent the greed and fear oscillation, under a global scale, as it is the largest stock index traded. The market is an ever-changing-chaotic-bipolar environment, made up by thousands of individuals, everyone with a different view in mind.

The markets sort out of noise. When you look at a chart of a financial instrument, you see a noise reduction artifact, that makes much more sense to the eye, but is actually a convention for segmenting a free flux into manageable items. The fundamental noise gives shape to the chart. The tenths of thousands of actors that interact with the S&P 500 are the propelling noise that fuels the market.
Before the electronic era, the price was unique for the day, being the equiibrium value for all partecipants. Today, the price is the close of the time frame and that’s not a small difference.

Using technical analysis (ta) tools, I’ve always seen many attempts (indicators) to “clean” the data, to reduce or to wipe out noise.A clear overfitting attitude. Splash ahead. When you take a position, it is under some expectations and sentiments are involved. Sentiments conflict with opinions. They struggle by nature.

Using neural networks (ai), I’ve discovered a tool that loves noise and is able to manage noisy correlations with a high degree of abstraction, or intuition, as you may call it.

While opinions still run wild in the territory of ta, they drastically reduce if you use have a robo-advisory ai that crunches numbers in the background. And the robo-advisory is where the knowledge is transferred, where a learning process is applied to give to the ai the experience it needs.

In r.Virgeels’ case, the training is by necessity influenced by my attitude towards the market, I’m aware. I revised the training so many times, that I would say it is scientifically correct, but inside I know that another person should do some different evaluations and should correct some items. Consider that training is 100% connected to output quality. If you set up a fantastic neural model and feed it with rubbish, you just get rubbish out, no way.

The neural networks need to have all their data and training correct and well fitted, then the magic may happen. And then, you no more need opinions, just a few about the framework, about the global picture, for being in sinchro. r.Virgeel knows the market better than me and you and probably any human on the planet, for the simple reasons that it can correlate dozens and dozens of inputs, and we cannot.

Aug

2018

Astonishing results

The S&P 500 has entered a new never seen before territory, passing 2900 level on Monday, and you may wonder how it is possible that r.Virgeel may forecast something that it has never seen before.

It’s a good question. You have to know that neural networks, if applied to a well designed model, have the ability to generalize, a typical human behaviour. To generalize means to derive or induce a general conception or principle from particulars: in r.Virgeel’s case, it means that it has enough experience (past data and training) to digest never seen before values and produce a reliable analysis.

Aside the confirmation that the model that forms the foundation of r.Virgeel is well shaped, another interesting observation regards the fact that this is a further demostration that the market has an inner hidden structure and any random walk model is rubbish. The fact that humans are not able to see this structure is not relevant, when you have such a tool as artificial intelligence brute force.

Given the astonishing results of r.Virgeel (yes, they are astonishing for me too), I’m working for the extension of the model: it’s a hard and tedious job, it will take time, but I’m beginning to see that improvements to the model are possible. More data, more precision.

It’s artificial intelligence, it’s different!

Aug

2018

Managing bifurcations

You probably have noted an evident discrepancy in the public weekly and monthly range chart, published daily on the site home page: this is mainly due to the fact that in the latest couple of weeks the S&P 500 has gone through a large bifurcation, well managed by r.Virgeel in the daily and weekly time frames. Obviously, the monthly time frame is lagging, due to its own nature, and still reflects r.Virgeel forecast before the bifurcation event.

The bifurcation event happens when historical reactions to stated conditions were multiple and not univocal. Dealing with a long historical record, this kind of event are rather frequent and the are usually a nightmare for technicians. It is a typical behaviour of large chaotic systems.

This is a good example of the ability of the model to manage the ever changing nature of the market, as I say it is adaptive and responsive.

r. Virgeel has managed the short term correction, forecasted well in advance, with simplicity and is now back on the correct side of the market.

It’s artificial intelligence, it’s different.

Jul

2018

Latest performance

The following slider shows some latest forecasts brewed by r.Virgeel on daily time frame: it is almost in realtime, as it shows how the model has acted since the last bottom in 2700 area in late June, starting from the close of latest 27th of June to 18th of July, for 15 bars, so three full weeks.

in bar #1, you may note that r.Virgeel marks the third consecutive reverse signal: it’s a very clear entry suggestion, at next bar opening;
in bar #2, we have the confirmation: a reversal bar and the Stop now correctly in place;
subsequent bars shows how r.Virgeel reacted to some “uncertainties” in the S&P 500 and to the following move.

[metaslider id=”11911″]

You may finally note that the weekly forecast encapsulated in the chart has been slower, in this case, to adapt to the evolution of the market.

Even considering the worst entry point at 2716 (the close of the 28th), as the index is now around 2800, the position is 84 points positive, or +3%.

Jul

2018

New feature: a short speech

I’ve done a step further – a short step, indeed – in the construction of a report from the data output of r.Virgeel. It speaks numbers, but we better see some added word, I suppose. So I’ve added a new section to the daily report (only for subscribers, so), titled “r.Virgeel condensed”: it summarizes the relevant data into sentences. At the moment, just the principal indicators are condensed, but the aim is to include some other interesting data.

Here, a test sample of the new section, (with errors!)

The new feature is just out of the lab and it’s plenty of subtle logical traps, so be patient for possible malfunctions. By now, just three lines. Hope it helps.

Jul

2018

In gloriam of technical analysis

If you have read some of my notes, you may have formed the idea that I hate technical analysis (ta). That’s not true. Dealing with r.Virgeel, I have seen the dramatic limitations of ta, but also some interesting aspects.

For ta, I refer to a program (or a website) that let you chart the price with some indicators overimposed, as trend lines, moving averages, RSI, Momentum, Stocastic, and a full library of others. The final aim of using it is to affinate the timing, having triggers that ring the alarm. Every platform is different, but you should always have a range of options to even automatically execute orders. And a plethora of indicators, you have to study them. Every ta tool has some lag encapsulated and gives a fantastic reading, ex-post and with “correct” parameters.

What I’m suggesting, is that ta is affordable locally, when you know that the probabilities of an event are in your favor: to accomplish this you must have a very clear, simple and realistic action plan and stick to it totally open minded. Also I suggest to experiment with automated execution, applying it “locally” to enter or exit a position with the help of some triggers. If you feel shy to make the transition from decision to act and acting in itself, this can help. Personally, I’m a big fan of personal execution.

Then we have Elliott’s Waves. It is considered a branch of canonical ta, with something esotheric. I love Elliott’s Wave Theory, even if I’m totally aware that is foolish to trade using just it. You know, as your eyes get trained in recognizing Elliott’s Waves, then you start seeing them everywhere.

Here in the chart, the Elliott’s Wave for current market is detected as shown, so we are near the end of the accumulating phase of a fifth wave that has two main targets, at 3000 and 3300, in EW’s opinion.

chart of weekly SPX from AdvGet

Some technical analysis programs or websites give the possibility to fully automate your trading or use an already existing bot to trade your account. Now, if any of these system should work, you will have plenty of multimillionairs around: what really happens is that the bot might gain some momey for a while, to inevitably crash as soon as the volatility changes, or another parameter goes mad, even if the system is sophisticated “enough”. Crashing the bot, you are out of play overnight, your account is zeroed soon and fast. Not nice.

Ta can be really useful, with few simple indicators and some active feedback, to have a good timing for your capital managment. Maybe in the ’70s and the ’80s , you could make money with just ta, today you have to gain some skill with it, but it’s not sufficient.

Jul

2018

IMHO

In latest weeks, I did some homekeeping to the website, reorganizing the contents of the blog, improving graphics and revising all pages. A brand new intoductory page is online, that explains the genesis and the characteristics of r.Virgeel.

I noted, re-reading many of the texts, that I often linger to show where r.Virgeel has problems or how it happens that it behave falsely and so on. It’s my attitude, I have to map everything and everything must be all right to pass to the next step. Now, if you ask me my real honest candid plain opinion about r.Virgeel, well, I just can say it is fantastic! It makes the technical analysis look pre-deluge. It does not analyze one single line of data, it correlates dozenz and dozens. Yes, you have to trust it, and this will require a bit of time.

In latest weeks, while the index was going through a complex correction, r.Virgeel has kept us on the correct side with a nice timing – and I mean that it makes us aware of the events coming, days or even weeks in advance. It has passed through some bifurcations, usually with just one bar of uncertainty. It is performing very well and its experience (the database) is larger and cleaner everyday.

I say it is fantastic, not only because I wrote each line of its code, but for three main reasons: r.Virgeel makes a work that no human can imagine to accomplish: correlate dozens and dozens of historical prices and recognize patterns. Then, r.Virgeel does it work so well now that you can relax and enjoy your new spare time. Well, yes, if you are a medium to long term investor. And if you are a short term swing trader, you can profit from the forecasts as well, to build up your strategies. I personally tested succesfully the use of r.Virgeel predictions for intraday trading on CFD. Finally, r.Virgeel “sees” the SPX – and it can see it in advance – as no other robo or analyst does, and it’s actively developed. It’s a growing artificial intelligence.

Of course, as I often repeat, it’s different, you must be open to a deep change in your trader’s mind: less stress, less compulsive orders, just wait for all the stars to position correctly and act in the correct direction.

Jun

2018

spxbot limits

Different trading and investing styles

I’m fully aware of the basic fact that every trader and investor has it’s own style. Many school of thinking, but everyone is really different, particularly in the private sector. If a private trader survives the first 18 months without being wiped out, then she/he may have the possibility to play on. It’s a sad and real statistics: 95% of traders are wiped out in the first 12-18 months of activity. So, if you are a private trader since years, you are in the 5% and you have built your skills with iron and steel, it’s not easy to approach a new language.

In effect, a.i. tools are very comprehensive: the result is there, fast, precise, direct. You just have to pay attention, when required, then to act if necessary. The whole decision process that makes the foundations of a trading system is questioned. It’s not an easy process, it will not be.

Mind changer about traditional tools as t.a.

Artificial Intelligence tools, not only r.Virgeel, implies that you change your mind about the instruments of analysis. Are you there with any of the technical analysis tools, or with a realtime CFD, you plot your oscillators, you backtest an optimal setting and decide, based on a unique line of data and a monodimensional analysis. A.I. can analyze many different correlations concurrently, sorting out with surprising results. It is obviously different, it is much different.

If you are totally unaware of a.i.. and neural networks, you do not need to read huge books to understand. You use Excel, for sure. Read this, then it will be easier. Made simple, supercharge and megapower a spreadsheet and you have a neural network. Then you have all the a.i.: image recognition, diagnostic, speech recognition, text recognition, and you name it. Once you understand the brick, then the wall makes sense.

The fact is that an a.i. robo-advisor makes the dirty work for you. Collects data, builds tables, generates logic, connects correlations, normalizes the resulting cloud of data and generates the output data. Whooo! All in one. And it’s fast!

Low adrenaline, stress reducer

People love adrenaline, excitement and, basically, confusion. In the long term, this attitude generates deep stress, that reflects into bad behaviours. If you are a few minutes ticker trader, r. Virgeel is not for you, probably. Well, as it gives a daily trend, it may help, but…

Once you have a good robo-advisor, you need less to have opinions about everything. It monitors the data, it makes the loops, it builds the report. You must trust it, follow the suggestions and pull the triggers. Stress is highly reduced. Instead of needing to have an opinion about everything, you just have to evaluate a very well documented “opinion” generated by the a.i. model. You know, I like to say, it’s different.

For what I can see, robo-advisory is taking shape as large (and expensive) premium sites with a large choice of instruments, with applied different forms of analysis and previsions. I argue that the neural analysis is often simplified and this can be a good thing, overall. In other words, these sites offer a large set of instruments and an automated training.

Here at spxbot it’s a completely different music (well, it’s a premium site, but it’s cheap). First, just one instrument – the S&P 500 – here. Then, the correlated instruments are hundreds, to represent the global finance world. All for one, we may say 😉 More, r.Virgeel is highly deparametrized, meaning that it work by brute force and not by rules. Finally, r.Virgeel is trained “personally”, bar by bar. Total human supevision on the training of the model. You know, it’s always the same old story: you put rubbish in, you get rubbish out.

Jun

2018

Are you kidding?

Going throug the whole materials that I have accumutated during spxbot development, I crossed this post from Dec. 19th 2014, available here.

This was the very day I opened my eyes, this chart demontrated that, even if it was in it’s very first steps, r.Virgeel could see “things that we humans…”

The chart is here. It is very rudimental, but the message is clear. We came from a very negative week and the forecast – as usual brewed in the weekend before the Monday opening – showed a close totally recovering the loss.

I thought it was kidding and that my many months of work were rubbish. Then came the Friday checkout and… Bingo! The dart was in the centre. I really couldn’t believe!

(the small red dot is the close of the week, the bull’s eye is the forecasted value)

Two things were coming to the surface: 1. there is a structure in the market and 2. r.Virgeel can see it better than us.

More than three years since then, r.Virgeel walks on its legs as a nerdy teen now, long time has passed.

May

2018

Daily forecast accuracy sample

I wish to stick to showing you samples of the r.Virgeel activity, in (almost) real time. There is no other way to test r.Virgeel than real time. Also, to avoid the “well chosen sample” effect.

Here, on the left, the forecasted bars evaluated on May 17th, on the right the chart of the actual bars until yesterday close, May 30st.

Left: forecast of May 17th Right: actual bars at May 30th

I show you the forecasted bars because it is by far the most difficult indicator to calculate, bars come in from the future squishly jigsawing and with modulated velocity. So whenever I want to evaluate r.Virgeel model, I first look at the future bars. Also, the future bars are a totally unattended calculation, meaning that there is no human intervention at all, just the correlation of a huge number of factors is taken in account.

Looking at the forecast, when it was issued, you might argue that a choppy period was to begin, that should not exceed the last high and that might break the last low. Two down days, followed by a reaction that flattens and returns slightly negative. You ‘d have known all this in advance, various days in advance. Either you are an investor or a trader or even a daytrader, you might take advantage in various ways from the forecast, but you are psychologically prepared to what is coming.

From the comparison ot the two sequences, I point the attention on the fact that the incoming wave is demonstrating to come in faster than expected by the forecast. This is a fact I’m long pondering. Almost all r.Virgeel forecast show this reverse lag, but I’m still detecting. One possible reason is the fact that the databases of r.Virgeel goes back to an era when everything, in trading activity, was slower: no internet, no direct instant execution, non continuous markets, just newspapers and a phone to pass your orders to your broker or bank. The ever accelerating time implicit in the trading activity is an interesting subject of research. Another possibility is that time in itself might be an accelerating media, but here I can’t go further.

May

2018

The Indicators

This post explains the main website feature: the indicators that form r.Virgeel vision of the market.

The indicators are:

Bars ahead – neurally calculated – H/L/C is forecasted for the next 24 bars
Target– neurally calculated – where the current move is heading
Stop – neurally calculated- a value that confirm the trend and generates alerts of reversal
Position – neurally calculated – a simple, but detailed, as a neural swing system, Position is calculated in three fashion: the positive attitude, the negative attiture and an overall attitude. In moment of uncertainty this help to have confirmation of the reading.
Color Bars – neurally calculated – an evaluation of market’s potential energy through color code. It has integrated the old Stamina indicator.
Signal – neurally calculated – top/bottom pattern recognition. It’s the simplest original version of the Position indicator: it fires probable tops and bottoms detection.

FastTrack – The standard report integrates now the FastTrack levels, from daily, weekly and monthly models for SPX. The daily D-FT is available for:

S&P 500
Dow Jones Industrial Average
Nasdaq Composite
DAX Frankfurt
SHC Shanghai
GOLD
OIL WTI

All indicators are calculated indipendently from one another, giving the opportunity to let them reciprocally confirm.

The text on the left of the chart summarize the relevant numerical data, more numerical data in the body of the mail/post.

It’s a reading of the present. The Position indicator is the most evolute and mimicks a complete trading system, with entry signals, position confirmation and exit signals. It is calculated separately for the long and for the short positions.

The Position indicator provides the following signals:

Open Position – generates signal triangle
Add to Position – generates signal triangle
Stay in Position
Reaching Top/Bottom – generates signal triangle
Close Position – generates signal triangle

that follow the ciclical activity of investing and trading.

It’s a reading of the present. The Signal indicator is the parent of the Position indicator and it was, at a certain point, removed from the charts and dismissed. It has the aim to detect the market turning points. Lately, I decided to revive it and use it the signal generation: you may see, usually near the extremes of the chart, there are some small colored triangles. These triangles are generated from the Position indicator and from the Signal indicator and they usually coincide. The triangles should mark the extremes, but more often they generate a cloud of signals around the reversals.

Bad News First

Then Good News Arrived

Expanding The Analysis

A Final Warning: EURUSD

Different trading and investing styles

Mind changer about traditional tools as t.a.

Low adrenaline, stress reducer

BARS AHEAD

TARGET

STOP

POSITION

SIGNAL

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