r.Virgeel

Weapons for resolute traders

If you occasionally read this blog, you may have noted that I often say that r.Virgeel is not a trading system. I want to warn the newcomers that they will not find any automatic fount of wealth here.

Any serious trader has matured its activity in a deeply constructed attitude: call it a plan, or a set of rules, or a set of indicators or all these things together. Traders hate losses like cats hate water: sometimes you need some, but better avoid. So, they build their framework, each one different, each one influenced by the history of each trader itself.

When I first designed the model that will become r.Virgeel, my trading experience was at the “trade-with-technical-analysis-the-fundamentally-chosen-stocks” stage. Many experiments started with sets of t.a. oscillators and were largely unsatisfactory. It took time to understand that I might ask to the model “impossible” answers.

What I understood is that I must ask the model “impossible” answers, otherwise better use the t.a. methods an go on with the traditional analysis. With “impossible” I mean not available using traditional programming techniques. All t.a. is computer-based nowadays, so code is the key to performance. But traditional code cannot perform certain tasks in a manageable reasonable way, like forecasting next bars as the weather channel forecasts the temperatures for the next days. The model, neural networks based, can. Now, consider that saying “tomorrow low will be at XXXX.XX” involves a certain responsibility, bearable, in my case, by the long term performance of the model.

I’ve developed various indicators, during the never-ending development of r.Virgeel, and many have disappeared, leaving an affordable set of unique information. To best fit into everyone’s set of weapons, you have t.a. mimicking indicators, as rV.Target or rV.Stop, and some “impossible” indicators, as rV.Future Bars or rV.ExpectedTurn (which evaluates how many bars to the next turn) or rV.ColorBars (which evaluates at which stage inside the ideal position is the market and shows it as an easy to read colour code).

At a certain point, I started to develop the rV.Position indicators: they are many, all derived by the same learning process that reads the S&P 500 index flow into positions, long and short, picking always the best market position. Now, you may say, this IS a trading system and yes, in some way it is. In the middle, there is the behaviour of the model, that sees and detects a huge amount of patterns and correlates dozens of different inputs. Experience has taught to my faithful subscribers and me that r.Virgeel is very responsive, sometimes too much (it is still young, you know), rarely it gets blind for one bar (this behaviour has been drastically reduced by latest improvements), and it is correct most of the time.  I do not consider rV.Position indicators as a trading system, so I do not follow blindly its entry/exit signals; instead, I search for correlations between all the indicators to confirm any trading activity. Of great importance is the Weekly analysis, that has demonstrated to be well integrated with the Daily analysis.

Since few months, I have introduced an automatic summary: r.Virgeel writes a brief summary evaluation on the daily report and this is intriguing: it is a small text and it is working well, opening the road to new possibilities in the model output presentation.

more on the indicators…

 

Posted by Luca in free, generics, indicators, r.Virgeel, 0 comments

Latest improvements

Latest months have been plenty of improvements in the structure and behavior of r.Virgeel. It now outputs a standardized 3d matrix of the indicators, that is easy to chart and interpret. A new interpretation and writing module is now active and r.Virgeel is able to write comments on its own. Two new indicators have been introduced: rv.Swing and rv.Rank. The Alpha chart page (premium users only), reflects all these improvements and it’s now easier than ever to read, now that r.Virgeel has started to write.

Latest months evidence is confirming that r.Virgeel is fine-tuned with the S&P 500 index and very responsive to market turns. It anticipates the turning point with simple signals and progressive degradation of the indicators, plus a warning system. A simple interpretation let’s you discern between corrections and major turns, to get maxim profit from the running position. r.Virgeel follows the market either long or short and with the aid of the FastTrack indicator, it can be useful even to intraday traders, at least for figuring out how the market is positioned. By personal experience, given an affordable background description and diving in the intraday arena, with a couple of averages and oscillators, it’s not difficul to follow the waves profitably, even down to the 2 minutes charts.

 

Posted by Luca in checkouts, free, generics, r.Virgeel

Week 19 checkout

Here you may see an enlargement of the chart that the subscribers have receive one week ago, last Friday night (CET), with overimposed the real weekly action: r.Virgeel, in its weekly version, has nicely caught this week range and direction, shown in the rightmost bar, confirming the turn signal generated by the daily forecast.

In circumstances like this, the power of artificial intelligence shows at its best, being able to provide an information that no technical analysis  can even imagine.

Has r.Virgeel access to reserved infos? No. The model is built with the numbers publicly available about the world markets and no mind reading ability has been injected in it. 😉

It is just the power of correlation and pattern recognition: if the model is correctly setup, it sees things that we humans… It’s not magic. It’s number crunching.

Have a good Friday!

 

 

 

 

 

Posted by Luca in a.i., checkouts, free, r.Virgeel

The turning point

Eight days ago, on the 30th of April, r.Virgeel has fired the first “Close Long Positions”. As usual, since it trained this way, we needed a second signal to confirm, that arrived the following day, on the 1st of May. So, in the next one/two bars, depending on your trading style, the spxbot users have closed their long position, opened back in the first days of January, with a good 16/17% of gain in exactly four months.

r.Virgeel has correctly detected the entry and exit points and it is now evaluating a new target for the current wave downward. I may say, it is interesting to note that usually, at the beginning of a move, r.Virgeel has a more precise outlook of the target, that during the development of the wave gets fuzzier and more undefined (I understand that this may seem against the logic, but it is what I have observed during the years, in many occasions).

Does r.Virgeel have mind-reading powers? No, I just think that some patterns do appear in anticipation of relevant events (someone knows in advance and acts in consequence), impossible to be detected by humans, but not impossible for brute force artificial intelligence.

 

Posted by Luca in checkouts, free, r.Virgeel

The new AlphaChart

Since a few weeks, subscribers have a new tool,  the AlphaChart page.

This page on the website has substituted the daily email and post, it has a larger chart, almost all model’s outputs are represented and it integrates the weekly and the monthly forecasts on the same chart. Most recent bars are enlarged in the bottom right corner, with the projected D-FT levels for the incoming bar. It has all relevant numeric data reported on it. The chart is clean and easy to be read, it has room for improvements and additions, easy to be accessed by your smartphone, tablet or pc.

The AlphaChart is updated every 15 minutes during trading days, to let users have visual feedback in (almost) realtime.

The first chart of the final version of the AlphaChart, dated 8th of February.

By the way, this chart indicates an rv.Target at 2805, exactly where we are almost one month later. Targets are dynamic, new targets have been opened during the past month.

The AlphaChart is still under development: it has reached a first stable step and I will refine and complete it. Also, the chart page is growing with additional analysis and the new real-time updates, that, I have to say, is a bit tricky: it is in alpha testing, at the moment, meaning that it may become a stable feature or die soon for lack of interest. But it may be important, during reversal days, to track the market during the close phase, to get alerts in advance.

 

 

Posted by Luca in free, generics, model insights, r.Virgeel

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.

 

Posted by Luca in free, minority report, model insights, r.Virgeel

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.

 

 

 

Posted by Luca in checkouts, free, performance, r.Virgeel

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!

 

 

 

Posted by Luca in a.i., accuracy samples, free, generics, model insights, r.Virgeel

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.

 

 

 

 

 

Posted by Luca in a.i., accuracy samples, educational, free, model insights, r.Virgeel

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.

 

 

 

 

 

 

 

Posted by Luca in free, model insights, performance, r.Virgeel, subscription

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:

  1. that the market may go any direction any time,
  2. that exceeding the traced levels is a clear sign of continuation or reversal of the trend
  3. 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:

1.

2.

3.

(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”]

 

Posted by Luca in free, indicators, r.Virgeel

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.

 

 

 

Posted by Luca in free, generics, model insights, r.Virgeel

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

 

 

 

 

 

Posted by Luca in elliott's soup, free, generics, r.Virgeel

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.

 

 

 

 

Posted by Luca in checkouts, free, performance, r.Virgeel

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.

 

 

 

 

 

Posted by Luca in free, generics, r.Virgeel

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!

 

 

 

Posted by Luca in free, model insights, r.Virgeel

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.

 

 

 

Posted by Luca in free, generics, r.Virgeel

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%.

 

 

 

 

 

Posted by Luca in checkouts, free, model insights, performance, r.Virgeel

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.

 

 

 

 

Posted by Luca in free, generics, r.Virgeel

The Indicators

Sample chart from May 7, 2018

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.

 

BARS AHEAD

Coloured bars. It’s a glimpse into the future: they represent the less improbable path the market is supposed to follow, for the next 24 bars. In the background, the latest monthly and weekly forecaste bars give a more complete and synchronical view of the coming events.

 

TARGET

Blue dots, blue lines. It’s a glimpse into the future: the Target is an evaluation of the price level that the S&P is bound. More the price nears the Target, higher the probabilities of an imminent turn.

STOP

Red dot, red lines. It’s a reading of the present. The Stop is the value that, if broken at close, suggests that the position has come to an end. It works either for long or short positions. The Stop is free to fluctuate and, by experience, the descending Stop is a sign of strength of the long position (and reverse), usually occurring during choppy phases.

Also, the weekly Stop is present on the chart (darker red band).

POSITION

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.

 

SIGNAL

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.

 

Posted by Luca in a.i., educational, free, indicators, r.Virgeel, 0 comments

Troubled Waters

 

Hi, I’m r.Virgeel. This is a screen capture of  a 2D chart of a slice of my brain. It is the description of tiny bit of reality: not exactly, but not so far from a DNA representation of the S&P 500. What is interesting about this image, is that as reality shapes itself through time, it gives birth to patterns, ever changing and ever repeating patterns, and sometimes they appear visible, as in this sample.

If the market (i.e. the S&P 500) were randomly driven, the chart would have evenly distributed points as in a noise pattern and it would be impossible for me to forecast anything.

Here, even if noise is present, we have a representation of a flow through cyclical patterns, not a random distribution of points.

The flow appears to concentrate and dilate in relation to different frequencies and to overlap in temporary separated flows, like a wild river.

 

 

Posted by Luca in free, r.Virgeel

The Big Jump Ahead is here

Today r.Virgeel is in musical mode, and it’s now projecting next top in mid/late June. It will be high, really high. Know it in advance!

 

 

 

 

Posted by Luca in free, r.Virgeel

At which point is the Trump’s Wave? a Roadmap

Weekly chart of S&P 500 index

The Trump’s Wave started on Nov. 2016, where the yellow dot is placed. To better get the shape of the growing branch, the weekly data is much better.

No need to say that the U.S. stock market is in orgiastic bombastic mode. Against most expectations, it is continuously hitting new all times highs. And no need to say it’s not time for short positions.

The target are there: to complete the third the optimal value is in area 2830/40. Then we may argue a flash crash to form the fourth. Then, and only then, we may put some real final target in place, but AdvGet suggests that it may be near 3150.

Mr r.Virgeel is even more optimistic. The model sees a possible 3300 peak.

But when all this will happen? February may see a first small weakness, followed by late August/September for the formation of the fourth. Then, hold on your hat! We may assist to a huge jump, an explosive fifth, from 2100 to 3300. Mr r.Virgeel sees things that we humans cannot see. It’s just that. The model was never taught in Elliott’s Wave theory, but it is often in accord with the EW readings, only it sees the incoming waves. It’s a graphical effect, or my tired eyes, but EWs materialize in its mind, as well.

 

 

 

Posted by Luca in free, r.Virgeel, 0 comments

Model Training Update

from the Training tool, with Stop, Target, Energy and Cyclical analysis

 

The model needs training. The training tools have been deeply revised. In the beginning the training was done by hand (!). Then a  simple tool interfaced the operations, still giving space to errors and inaccuracies. Now the training tool has become a complete “position manager”. I have in mind to call it R.Virgeel, but its just data and code, in the end.

The training phase is when the knowledge is transferred to the model and the process is nicely complex and plenty of traps, but undergoes one simple rule: “garbage in, garbage out“.

Having to organise the positions, my approach was to search for the basic ultimate tool, the one and only that you need to manage your position and it came out that it is the Stop. It is a very traditional and well known trading tool, with a lot of variants, and if correctly used, a stop can really embed an almost complete trading system.

If you pair it with the Target, you already have an almost complete position manager. The target is where the current position is heading to, and it has been doubled now, two slightly different calculation to mark the area of probable inversion.

from the Training tool, with Stop (red dots), Target (green dots) and Energy analysis (coloured bars)

Then, if we calculate the potential energy that flows through the positions, we have the possibility to argue where in the current move we are. It is the Stamina indicator, nothing graphic, just two percentage numbers, separated positive and negative positions: stamina is 100% at position beginning and 0% at position end, and it degrades as the position is going on.

Finally, the Position indicator is the feedback, with graphic signals at the extremes. It has totally absorbed the Signal indicator, so the latest has been removed.

All these indicators are neurally calculated, based on close data, each day.

 

 

 

Posted by Luca in free, model insights, r.Virgeel