Timing Solution in Progress
Overview
When you buy Timing Solution, you get a state-of-the-art software package oriented to provide the most reliable forecast available today. And it is not just that. You have a unique possibility to become a participant of a very exciting process as well. It is the quest for understanding our boundaries in forecasting. It is true that 100% reliable forecast is not possible for human beings. And it is also true that our past and our present can tell a lot about our future. We can say the same regarding any activity, any part of our lives, including the markets. Fundamental analysis and technical analysis provide us some information helping us to make decisions in trading and investing. Whatever way we choose, what technique or trading method - they all have one common feature. They all aim at or are based on some kind of forecast. So, it is important to have as much reliable forecast as possible.
The process of understanding how to create a reliable forecast has many stages. There is some sort of a plan in developing Timing Solution software. Sometimes the main stream was hidden by myriads of small details, and it might be not so obvious why some changes or modules appeared in the program. Some questions of Timing Solution users show the necessity to write an article that gives the impression of the whole picture. I plan to publish here the review of changes in the program and ideas explored every quarter. This first review covers the changes made this year (8 months); it is an attempt to explain what they are for.
Description of the changes
The program has started with Timing Solution Advisor module (which has a set of pre-tested models) and main blocks that allow users to create their own models and forecasts for securities of their choice. Our research group constantly works with all modules of the program. Any promising finding is added to the program almost immediately after Back Testing.
1) Working with Indicators - indicators based on Zigzag:
In April 2005, we have added more technical analysis indicators recommended by our users. See here details.
There are many different indicators in technical analysis. The problem is to choose or develop the non-noisy indicators that are more suitable for creating the projection line. This is the main difference between technical analysis approach (generate the nearest buy/sell signal) and Timing Solution approach (generate the projection line for future price movements). We did a research on all added indicators trying to understand how, when and why they work. We checked our own indicators as well. It has turned out that the most promising indicators are based on zigzag (or filtered wave) idea. Thus, recently we have added to the program several new indicators.
The pictures below show different variants of indicators based on zigzag (the upper blue diagram is a simple zigzag, while the bottom red diagram represents indicators based on this zigzag):
Detrended Zigzag:
The most advantage of the detrended zigzag is the possibility to use it as a target/output for Neural Net, Spectrum module. Thus, we can make a projection line for this index and a forecast for its turning points. This is the typical forecast based on the detrended zigzag (the next turning point is revealed with the accuracy of 10 days):
Detrended Zigzag with Curvature parameter
The curvature parameter allows to localize the turning points more precisely, but we should be very cautious while using it.
Up/Down Trend Zones
This indicator works in Yes/No regime. It simply points out the presence of Upward and Downward trends. For us, the most interesting moments are those when this indicator jumps from one trend to another. You can make a forecast using this indicator as well. Here it is (for the same data and model as above):
Now the next turning point is localized more precisely.
2) Templates - first step to stock market genetic engineering:
Here we presented the templates for Neural Net. See here details.
This feature looks very promising, and we will use it intensively in stock market genetic engineering approach (see below).
3) New module to reveal astronomical cycles:
Here the explanation
regarding this feature. In this module we used the brand new algorithm that
allows to reveal the existence of astronomical cycles very precisely and very
quickly. In brief, this model generates the planetary waves regarding any planetary
cycle and watches how this wave "describes" the price movement. The planetary wave
reveals the maximum information regarding the influence of any astronomical
cycle (which may be responsible for mass psychology phenomena).
We do not need to research different harmonics here (like we did for Composite
module), everything is already included.
This is the example of Sun-Mars planetary wave calculated for
EURO/USD:
.
The more information regarding planetary waves is here. This approach is available for fixed cycles as well.
We continue to improve existing modules of the program.
4) New in Spectrum module:
Here the explanation regarding some changes in Spectrum. Now it is possible to analyze different type of cycles - W Cycles (W - wavelets). The current Spectrum module is based on brand new algorithm that allows to reveal short term cycles. This algorithm is maximum adjusted to typical financial data.
Improvements have been made in the beginner's module of the program - Timing Solution Advisor.
5) Timing Solution Styles:
The biggest problem in
creating a projection line is an existence of too many possible parameters to vary. It can
cause the "analysis paralysis" as it is very difficult to try
all possible combinations. To make users' life easier, we have developed the styles for
Timing Solutions module. Generally speaking, each style contains all information
regarding algorithms and parameters for creating a forecast for a specific group
of securities (stocks/futures/index). We combine the huge variety
of possible ways of creating the projection line in several groups.
For example, if you create the forecast based on fixed cycles
(Spectrum model), you will get 3 choices of styles:
The permanent style creates the projection line based on permanent cycles only, while risky style uses much more cycles (though some of them may be not so important). Below is the example how these styles work:
Going one step further
Timing Solution software is a unique combination of modern math methods and computer technologies developed for market analysis. We have mentioned above what is the difference between Timing Solution and technical analysis approach. This program differs as well from standard math packages (such as neural nets). The difference is that we develop techniques specially pre-tested for real financial data. The creation of adjusting algorithms and choice of initial parameters took us almost a year. But the process is still going. The following describes the perspectives of Timing Solution technology, you will see it soon in the new modules and upgrades.
1) Multi Stock:
The forecast you can see on www.timingsolution.com website is generated by a special system that generates the forecast for many financial instruments by few mouse clicks. This is the main idea of Timing Solution project - to generate automatically a forecast that initially involves many sophisticated and time-consuming routines. All you need to do is to choose the instruments to be forecasted, and the system performs this huge work itself. (We do not publish this system yet.)
2) Stock market genetic engineering:
This technology is a succession of multi stock system project. If you do not have long enough price history data, your possibilities in creating a forecast are very restricted. But we can research the habits of this financial instrument (i.e., patterns of its behavior in the past) and find the analogy between chosen price data and other well-known financial data (like Dow Jones index, Crude oil prices). In other words, to get the projection line for some financial data with not consistent history, we use the knowledge received from other well documented financial source. This module will be published in the future as well.
So, you see, this process is not finished yet and is going...
The Road goes ever on and on
Down from the door where it began.
Now far ahead the Road has gone,
And I must follow, if I can.
Pursuing it with eager feet,
Until it joins some larger way
Where many paths and errands meet.
And whither then?
(J.R.R.Tolkien)
Sergey Tarassov
September 10, 2005
Toronto, Canada