How It Works | The Second Opinion

Neural Networs / Machine Learning can give us a second opinion about the future trend direction, before we take the trade.

Like It or Not Machines See Patterns We Can't

Neural Networks and machine learning is just starting out but there are lots of code projects to use on time series data (stock data). I have seen neural network code run in a variety of scenarios and pattern recognition is a strong area but in absolutely no way are they a crystal ball into the future. My opinion is that there are about a dozen implementations for time series data that can work. They all have distinctly different approaches. My implementation uses a method called LSTM (Long Short Term Memory) to try to predict a forward looking daily trend to forecast 2 or 3 days into the future. My implementation of LSTM is providing a second opinion about the direction of the short term trend. By using Machine Learning as a final check in executing a trade, the overall system sees a 3% to 9% increase in success.

The Neural Networks in my implementation is an application that I run after the system has generated a trade idea. I run it this way because it's a time consuming process and it's an expensive process with regards to computer resources. Machine learning is an exciting topic because it's evolving fast and it has such huge developer base.

Step: 6

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"Second Opinion". For the next step in the series, click below.

How to Increase the Odds of a Successful Trade.

How It Works Series