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Strategies & Market Trends : Neural Nets - A tool for the 90's -- Ignore unavailable to you. Want to Upgrade?

To: CatLady who wrote (52)	1/12/1998 8:27:00 PM
From: Optim	Read Replies (1) \| Respond to of 871

CatLady, The confidence level is just an estimation from the net as to how it is doing. If you achieve such high (90%) readings, chances are the net is 'memorizing' patterns from the history, and not really generalizing well. Although it may feel like the net is doing well, it will probably test very low in real world trading. A confidence reading in the range of 60-70 is the norm for a net with a good amount of history shown to it. Again, this varies from stock to stock and the nets usually do better on more active issues. Also, a while back you asked for recommendations on books. Here's a few that I have read and found to be easy enough for me to understand, while comprehensive enough for me to use. Cybernetic Trading Strategies - Ruggiero, Wiley Traders Series - Found this one to be a great overview of trading systems, including Neural Nets, Genetic Algorithms, Fuzzy Based, Intermarket Analysis and a whole slew of other more basic systems. It also includes Tradestation code for those die hard traders. I found that this book has given me the most ideas, and whenever I go back to it, I come back with new approaches. Essential reading for anybody who wants to produce a trading system. Neural Networks for Financial Forecasting - Gately, Wiley Traders Series - A great book for those starting out with Neural Nets. A little old, but it shows the simpler trial and error approach to producing a good NN. Not too scientific, and will explain all the fundamentals. Genetic Algorithms and Investment Strategies - Bauer, Wiley Traders Series - A great overview and in-depth look at GA's and their application to trading. Thoroughly explains the concept and application of GA's. Neural Networks in the Capital Markets - Refenes, Wiley Traders Series - If you are starting out, DON'T buy this book. It contains a wealth of information, but is very math intensive, and is a little intimidating. I don't understand most of this book, but look forward to the day that I will! Considered to be a valuable reference for some advanced neural net users I have spoken to. Technical Analysis of Stocks and Commodities - Magazine - A great magazine for anyone involved in trading. Introduces and discusses new and old forms of TA, covers emerging technologies, psychology, reviews software, etc. Well worth the cost. Hope these help! Optim