Automatic Pattern Search

This is a discussion on Automatic Pattern Search within the Trading Software forums, part of the Commercial category; Alexander, a roulette wheel may be "completely deterministic" but I do not believe that the roulette dealer is. The dealer ...

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Old Aug 3, 2008, 12:35pm   #141
 
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Alexander, a roulette wheel may be "completely deterministic" but I do not believe that the roulette dealer is. The dealer can spin the wheel in any whimsical way that he (or she) wishes. He can do a slow spin, then a fast one and then a medium one. At our local casino the dealres are told to vary their spins. The dealer may be in a bad mood and he may take it out on the wheel. As well, he can choose to use the small white ball instead of the regular size ball. He can also choose to release the ball a bit away from where it landed in the previous spin. That happens quite often. Furthermore, he can flick the white ball as slowly or as quickly as he wishes, whatever takes his fancy! So we have four factors which are not at all predictable: the speed of the wheel itself, the speed that the ball is flicked, the choice of ball, and the release point of the ball. All four factors are determined by the dealer (a human being, who is not predictable) and therefore not mechanistic. The dealer's brain does not conform to Newton's Law! Anyway, aside from the dealer, I do not believe that all of the "initial conditions" of the wheel itself are knowable. Will the casino allow anyone to measure all of the dimensions of a particular roulette wheel, including each baffle separating every number on the wheel? Are we allowed to test the wheel to see whether it is perfectly balanced? Are the players allowed to examine the roulette balls in order to weigh them and measure their dimensions? Common sense would say that roulette is not a "completely deterministic system". From a practical perspective, the outcomes can not be predicted, and the casinos bank on that. I do not believe that the use of a computer (super or otherwise) would make any difference! The East Europeans may have had a luck streak or several but I don't believe that their success was due to a crafty computer program. As they say "Do not confuse **** (US = "ass") with class".

Regarding your comment that a "truly random number generator" does not exist. That may be true, in the sense that a perfect sphere or vacuum does not exist. However, casinos don't need to have a perfect RNG. One which is 99.99% random (or whatever the case may be) is adequate for their purposes, just as a person with a gold ingot is satisfied if it is 99.9% pure.

I am very well aware that APS does not attempt to predict the next outcome. I have never said that it does. I can live with probabilities. Life itself confronts us with uncertainty, all the time.

I would be very happy if APS fails (to use your word) when subject to random data. That is, if it does not find any patterns I would be very favourably impressed. That is precisely the test that interested me from the beginning of my imput to this thread. By the way, I believe that you contradicted yourself. Earlier in your post you seem to believe that you did not think there was a "truly random number generator". Later on, you took for granted that random numbers could be generated, for testing by APS. If a "truly" RNG does not exist then how would you be able to get your hands on random numbers?
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Old Aug 6, 2008, 9:30am   #142
 
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jack01, I tested APS demo with random data, no patterns found. You can test yourself --- it's easy --- no need to have full program if you don't have.
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Old Aug 6, 2008, 9:48am   #143
 
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APS tested with random data

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Originally Posted by trader3cnd View Post
jack01, I tested APS demo with random data, no patterns found. You can test yourself --- it's easy --- no need to have full program if you don't have.
Trader3cd:

That is brilliant! My estimation of the program has now greatly increased, provided your test was valid. What I wanted verified was that APS does not generate any (or very few) "false positives". If APS finds no tradeable patterns in random data I am reassured on that point. Perhaps others do not regard this point as important.

You are right. I do not yet have the program, but I understand what it does. I have read some of the APS author's articles and they impress me.

May I ask you how did you get the random data? Did you make your own random data? If so, how did you do it?

Jack
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Old Aug 8, 2008, 10:34am   #144
 
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What I wanted verified was that APS does not generate any (or very few) "false positives". If APS finds no tradeable patterns in random data I am reassured on that point. Perhaps others do not regard this point as important.

Jack
jack01, be aware that what you call "false positives" will show up even if APS cannot find patterns in random data. This is one reason I do not trade individual patterns but instead I trade probabilities that I calculate based on the patterns APS generates.

I have found the use of system tracking in APS very useful for that purpose combined with the function to track open positions of models saved there.

Ron
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Thanks! The following members like this post: equtrader
Old Aug 9, 2008, 4:20pm   #145
 
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This looks really interesting. Need to look into it a bit more, but I think this is very similar to part of what i have been developing with my farther. Might try to incorporate it as it would save a lot of time, just think ours might be better :O

Thanks for the heads up.
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Old Aug 9, 2008, 4:24pm   #146
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This is one reason I do not trade individual patterns but instead I trade probabilities

Ron
Excellent point.
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Old Aug 9, 2008, 11:36pm   #147
 
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jack01, be aware that what you call "false positives" will show up even if APS cannot find patterns in random data. This is one reason I do not trade individual patterns but instead I trade probabilities that I calculate based on the patterns APS generates.

I have found the use of system tracking in APS very useful for that purpose combined with the function to track open positions of models saved there.

Ron
Ron, I do not actually have APS yet. So I am unaware of the "system tracking" capability of APS. When you say "system tracking" are you referring to particular patterns that APS has found, based on the criteria you specified? If so, that sounds a good feature to me. I suppose some profitable patterns may change over time (becoming less and less profitable), while others patterns may remain stable, while others may grow in profitability. I can easily imagine that. Am I right?

When you say that you trade probabilities rather than individual patterns, would you be able to elaborate on that? I thought that APS itself gives you patterns based on the probability criteria (and other criteria) that you set. I think that probability is the essence of successful trading, along with self-discipline etc.

I agree with you when you say that, just because APS does not find any patterns in random data, the problem of false positives may still apply. As I said in a previous paragraph, the characteristics of patterns may change over time, some changing from "good" to "bad" while others doing the opposite. I think that patterns represent the collective sentiment/psychology of the market (i.e. all of the individuals trading). If I am correct, a profitable pattern would mean that the market participants (as a whole) act/react in a predictable way (for the most part), given a particular set of price bars. Over time, the sentiment of the mob, in relation to a particular set of price bars, may change, just as societies change in many other ways.

Jack
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