Technology
The software creates an agent-based model that consist of a population of agents representing traders or investors that trade on a virtual market. The agents use real market data as input to their technical trading rules that evolve through an adaptive form of genetic programming. The forecasts are based on the behavior of the entire virtual market instead of only the best performing agent. This aims to increase the robustness of the model and its ability to adapt to changing market behavior.
Contrary to many other techniques used in technical trading software (such as repeated optimizing and back-testing of trading rules, genetic algorithms and neural networks), Adaptive Modeler does not optimize or overfit (curve-fit) trading rules to historical training data. Instead, its models evolve incrementally over the available price data so that agents experience every price change only once (as in the real world). Also there is no difference in the processing of historical and new price data. Therefore there is no specific reason to expect that a model's back-tested historical performance is better than its future performance (unlike when optimization or overfitting is used). The historical results can therefore be considered more meaningful than results demonstrated on historical data by techniques based on optimization or overfitting.
Read more about this topic: Adaptive Modeler
Famous quotes containing the word technology:
“Radio put technology into storytelling and made it sick. TV killed it. Then you were locked into somebody else’s sighting of that story. You no longer had the benefit of making that picture for yourself, using your imagination. Storytelling brings back that humanness that we have lost with TV. You talk to children and they don’t hear you. They are television addicts. Mamas bring them home from the hospital and drag them up in front of the set and the great stare-out begins.”
—Jackie Torrence (b. 1944)
“The successor to politics will be propaganda. Propaganda, not in the sense of a message or ideology, but as the impact of the whole technology of the times.”
—Marshall McLuhan (1911–1980)