Tuesday, February 7, 2017

How do we work with historic data?

Introduction

A very central concept in ASA Trading Software is historic. There is always a probability for a once performed action will duplicate, and thereby you can substantiate different possibilities. There is never a guarantee the history will repeat, however, as long as it does it significantly more than 50% of the time, history will be the best indicator for getting a picture of the future. 

The more history the better

History can be economic news. It can also be technical patterns or data about Spread, volume ect.. Basically anything that in principle can affect a price is interestingly enough in regards to history.

As previously mentioned, we use deep learning and artificial intelligence in order to get historical picture of the technical patterns.

It is a bit easier working with news, also known as a fundamental analyser, because all it requires is a number. But again these data can be crossed with the technical analysis. Once again search engine technology works in order to get real time results.

The challenge is, the more data you connect to every search result, the lower will the population result become, and a result become less valid. This is where nominal distribution comes in, in order to rate the precision and validity of the result. The less spread of the variable, the better we can trade on background of the result. Therefore, it is not enough having only one causality and a probability of 90%.

Luckily, all of this can be automated with software, so a correct probabilistic assessment can be performed. Statistics is therefore, just as important in order to get the most optimal out of the history.