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Guest Tresor

Why So Many Indicators but Little Strategies in TL?

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Guest Tresor

Hello,

 

I have just one silly newbie question after reading many posts in different sections and after downloading many of the indicators that are extreemely useful for me.

 

Many thanks to Blue Ray and other contributors for their input and making replicas of the stuff for which I and other users of this forum with no coding knowledge would have paid hundreds of dollars.

 

Now, I am wondering if any kind soul with good coding expertise would like to make a step further and try to make better savings at pockets of the non-coders and help saving not hundreds but thousand dollars by coding replicas of some of top trading systems?

 

Would this be possible? Sorry, if this question for any reason seems insulting.

 

Regards

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I too would like the top performing automated systems coded up here for free. Come on BluRay, what's the problem here?

 

:confused:

 

I just hate having to work and learn on my own. I'd much rather download something off the internet for free and just turn the ATM machine on.

 

Thanks in advance BluRay.

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Hello,

 

I have just one silly newbie question after reading many posts in different sections and after downloading many of the indicators that are extreemely useful for me.

 

Many thanks to Blue Ray and other contributors for their input and making replicas of the stuff for which I and other users of this forum with no coding knowledge would have paid hundreds of dollars.

 

Now, I am wondering if any kind soul with good coding expertise would like to make a step further and try to make better savings at pockets of the non-coders and help saving not hundreds but thousand dollars by coding replicas of some of top trading systems?

 

Would this be possible? Sorry, if this question for any reason seems insulting.

 

Regards

 

Well the thing is unless he can code your mind you're not going to get much out of a canned system. The market is dynamic for one...add to that the mind is the real key to winning the market and I think you'll see why BF was so sarcastic in his reply. You have to develop a profitable plan that fits your mind and trading goals and then execute. One size does NOT fit all.

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Guest Tresor
I too would like the top performing automated systems coded up here for free. Come on BluRay, what's the problem here?

 

 

:confused:

 

I just hate having to work and learn on my own. I'd much rather download something off the internet for free and just turn the ATM machine on.

 

Thanks in advance BluRay.

 

Hi brownsfan019, no problem, I can pay for a few strategies like sell when DM- crosses DM+ or similar (but not several thousand dollars). You know, whenever I try to code something myself I always get ''compiled with error''. It is a frustrating always-losing battle for someone who writes song lyrics only and has no mathematical logic in blood.

 

I do feel your pain :) Humans are not properly mentally equipped to perform work. If they had been, they would't have hated working so much ;)

 

Regards

Edited by Tresor
just put a reply in a wrong place

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Guest Tresor
Well the thing is unless he can code your mind you're not going to get much out of a canned system. The market is dynamic for one...add to that the mind is the real key to winning the market and I think you'll see why BF was so sarcastic in his reply. You have to develop a profitable plan that fits your mind and trading goals and then execute. One size does NOT fit all.

 

Hi MC :)

 

I like sarcasm. Just wanted to provoke a discussion. What you said about coding someone's mind is interesting. Would this mean that any system sold without coding someone's mind (I guess all systems are sold this way) would be just robbing silly newbies out of their money?

 

Regards

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The question was: Why So Many Indicators but Little Strategies in TL?

 

The answer lies in the question: What type of forum is this?

 

The forum was started by James a few years back and James has a strong interest in Market Profile, the epitome of a discretionary trading method. I think most of the early posts were in this theme. I had certainly come across from a systems trading forum (Curtis Faith's one) and note that there are other sytems forums out there (Forex Factory is one of the nicest examples).

 

I don't want to be insulting in what I say next but its an observation of both the forums I have touched in the last 10 years and my own evolution as a trader: the love of indicators and systems is largely a newbie thing. So those forums are full of newbies.

 

A small percentage of traders succeed and remain system traders. Most who have long lives in trading seem to move to discretionary. Those who stick with systems accept the drawdowns and the low quality statistics that systems give (2:1 is a good profit factor in systems but I do staggeringly better with discretion).

 

I think its possible to mix systems and discretion in such a way that you get most of the benefits of both and will probably try that at some stage but success seems to come most easily with the learning that comes with discretionary trading. Part of that is because discretionary traders become naturally adaptable.

 

 

So the forums that have experienced traders in them tend to be largely discretionary. And here at TL we have a relatively quiet, polite, forum with a high ratio of experienced traders.

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Would this mean that any system sold without coding someone's mind (I guess all systems are sold this way) would be just robbing silly newbies out of their money?

 

Regards

 

IMO yes, people sell systems they don't trade for profit. Who's going to sell their true edge really? We have a few members here that are hardcore coders, I would bet that their 100's if not 1000's of hours spent programming a blackbox system will never be up for sale, at least not if they are still working.

 

I really intended for my main point to be that even if someone was to sell a legit edge...

"Good execution can save the worst strategy, Poor execution will destroy the best strategy"

In other words, the execution and discipline of the trader is often the difference between winning big or losing big.

:)

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Guest Tresor
The question was: Why So Many Indicators but Little Strategies in TL?

 

The answer lies in the question: What type of forum is this?

 

The forum was started by James a few years back and James has a strong interest in Market Profile, the epitome of a discretionary trading method. I think most of the early posts were in this theme. I had certainly come across from a systems trading forum (Curtis Faith's one) and note that there are other sytems forums out there (Forex Factory is one of the nicest examples).

 

I don't want to be insulting in what I say next but its an observation of both the forums I have touched in the last 10 years and my own evolution as a trader: the love of indicators and systems is largely a newbie thing. So those forums are full of newbies.

 

A small percentage of traders succeed and remain system traders. Most who have long lives in trading seem to move to discretionary. Those who stick with systems accept the drawdowns and the low quality statistics that systems give (2:1 is a good profit factor in systems but I do staggeringly better with discretion).

 

I think its possible to mix systems and discretion in such a way that you get most of the benefits of both and will probably try that at some stage but success seems to come most easily with the learning that comes with discretionary trading. Part of that is because discretionary traders become naturally adaptable.

 

 

So the forums that have experienced traders in them tend to be largely discretionary. And here at TL we have a relatively quiet, polite, forum with a high ratio of experienced traders.

 

Hi Kiwi,

 

Thanks for the answer. I will look into Forex Factory. What you wrote about performance of discretional traders and automated ones is close to my observations. I am a discretional trader. For the last month I have been occupying my buddy's server room (high performance machines) and have been heavily testing standard strategies (like Channel Breakout, MA crossover, new highs new lows, Trendline, etc.) that are attached to software like Tradestation or MultiCharts. After optimizing (1 year back) them all only one strategy (VPCI) showed better performance than my discretional trading. I am in a deep shock.

 

The failure of standard strategies led me to a conclusion that they are crap.

 

Based on this conclusion I made an assuption that they underperform just because they are so simple and to be profitable one need to have a complex srategy. Now I am in a process of trying to confirm / reject this assumption.

 

Please could someone experienced with complex strategies comment on this assumption?

 

Regards

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Guest Tresor
IMO yes, people sell systems they don't trade for profit. Who's going to sell their true edge really? We have a few members here that are hardcore coders, I would bet that their 100's if not 1000's of hours spent programming a blackbox system will never be up for sale, at least not if they are still working.

 

I really intended for my main point to be that even if someone was to sell a legit edge...

"Good execution can save the worst strategy, Poor execution will destroy the best strategy"

In other words, the execution and discipline of the trader is often the difference between winning big or losing big.

:)

 

I am happy with this discussion for two reasons:

(i) my trader IQ rose from 5% to as much as 10% ;)

(ii) you partially confirmed my assumption that a profitable system must be complex (100 / 1000 / more hours of coding).

 

Could you please elaborate more on a complexity of such an edge system? 1000 / 10000 lines of code? 10 / 100 conditions? 20 / 50 indicators?

 

Foregive me my being so inquisitive. Just need to asses whether it will take 5 years of my life to devise and code such a system or 15 years.

 

Regards

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I am happy with this discussion for two reasons:

(i) my trader IQ rose from 5% to as much as 10% ;)

(ii) you partially confirmed my assumption that a profitable system must be complex (100 / 1000 / more hours of coding).

 

Could you please elaborate more on a complexity of such an edge system? 1000 / 10000 lines of code? 10 / 100 conditions? 20 / 50 indicators?

 

Foregive me my being so inquisitive. Just need to asses whether it will take 5 years of my life to devise and code such a system or 15 years.

 

Regards

 

No clue, I'm no coder. My mind isn't good for that type of stuff once it gets beyond "if/then" complexity. I do however have a knack for psychology and love that aspect of the market. Keep in mind I'm a newer trader (under 2 years) and I have plenty to learn still. :o

 

I think Kiwi gave a very accurate comparison of newer traders and those raking in the cash. Pure systems and indicators are hints, but fully understanding the psychology behind the market movement is crucial. No set of indicators or basic system could ever give you that. IMO Discretionary with MP and VSA and any other mix of things to tune you into market sentiment and then systematic execution on your interpretation is the way to be timeless and profit from the market forever. Seems that black box systems would need to be tweaked or totally redone under different market conditions (the market is ever evolving). Look at volume alone from the last 10 years, as more people come into the market indicators present new patterns.

 

So to attept to produce an eternal system you would have to find a way to code discretion and interpretation of market sentiment. That's one hell of a tall order if not damn near impossible IMO.

 

NOTE: I'm not saying basic system based trading can't bring profit. I just feel systematic execution on a discretionary interpretation of events is probably the most profitable and long lasting strategy one could develop. Either way you can expect to put in a ton of screentime and/or a ton of coding time. ;)

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Tresor

 

First off, thanks for the kind words but you can understand the sarcasm that was posted.

 

The reason there's no strategies posted ,are as you've just said on your last post, they're mostly all crap. If I or anyone were to post a strategy, the first thing any newbie would do is:

 

Download it then insert it onto their favourite chart.......... then find out the profit factor is poor and then discard it and move on to the next one...... and on..... and on......

 

I've coded up several strategies and I'll give you my personal experience of it. Well first off I did the above example of inserting a strategy for 2 mins then replacing it when finding out it was no good. You then move onto the stage of.......well "what if I combine this strategy with another one, surely they'll filter out the bad trades"........ this goes on for another length of time.

 

You then find a strategy which is the best of a bad bunch and then suddenly you find out where the OPTIMIZE button is................ Whao this is great.... it's turned a mediocre strat into a super-duper one............. but hang on, it's only produced good for the last 4 months and was terrible before that............. ah don't worry, times have changed as people keep saying........... let's forward test it.................. 2 weeks later you've moved onto something else and optimizing the hell out of that one too.

 

I think TS should replace the word "optimize" with the word "CURVE FIT", as that's what it's essientially doing.

 

A classic example was I coded up a strat for the Dax and it made 14000 euros in 2 months with 1 contract and only having 4 losers out of about 80 trades, after several optimizations............ Wow I thought......... and as Del Boy says in "Only Fools and Horses " ( British Sitcom):

 

" This time next year Rodney........... we'll be Millionaires ! "

 

After forward testing it for the next month and a half, it turned out rubbish and was binned with the rest of them.

 

 

As MC also pointed out, if you had a blackbox system that produced money............ would you sell it or post it here....................... cos I'm pretty sure I wouldn't and I would hazard a guess that the rest of the TL community wouldn't either ................ the reason is.... WHY? ............ Why would you want to if it makes YOU money and giving it away or selling it might jeopordise(sp) that fact.

 

After saying all that, if you want some help in programming a strategy, I'll certainly help you out if you want, but I'm sure you'll soon find out that you're heading down the path I and several thousand others have been down.

 

Hope this helps

 

Blu-Ray

Edited by Blu-Ray

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I too would like the top performing automated systems coded up here for free. Come on BluRay, what's the problem here?

 

:confused:

 

I just hate having to work and learn on my own. I'd much rather download something off the internet for free and just turn the ATM machine on.

 

Thanks in advance BluRay.

 

 

 

:o.................... okay just for you, I'll put it next to mine.

 

attachment.php?attachmentid=6929&stc=1&d=1212706233

cashpoint1.jpg.fd2590659cdfe237e239096c41b3a61b.jpg

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Guest forsearch
After optimizing (1 year back) them all only one strategy (VPCI) showed better performance than my discretional trading. I am in a deep shock.

 

What is VPCI? It's a Volume Price Confirmation Indicator.

 

More information is available in this article from TASC, as attached here:

 

Between Price and Volume

 

Coding information on a VPCI-based strategy, as originally outlined in TASC, can be found here:

 

July 2007 - TASC Trader Tips: Volume Price Confirmation Indicator (VPCI)

 

You now have the keys to the holy grail. The rest is up to you!

 

-fs

TASC_VPCI_Between_Price_Volume.pdf

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Guest Tresor
What is VPCI? It's a Volume Price Confirmation Indicator.

 

More information is available in this article from TASC, as attached here:

 

Between Price and Volume

 

Coding information on a VPCI-based strategy, as originally outlined in TASC, can be found here:

 

July 2007 - TASC Trader Tips: Volume Price Confirmation Indicator (VPCI)

 

You now have the keys to the holy grail. The rest is up to you!

 

-fs

 

Yes, this is this strategy. I tried to post it but the uploader said invalid pla file. A good computer is needed to optimize this strat beacuse there are many variables x many variables = zillions of combinations to calculate

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Guest forsearch

Here you go....

 


Indicator: VPCI
inputs:
   Price( Close ),
   Length1( 5 ),
   Length2( 20 ),
   VPCIAvgLen( 20 ) ;
variables:
   VolValue( 0 ),
   VolumeSum1( 0 ),
   VolumeSum2( 0 ),
   VWMA1( 0 ),
   VWMA2( 0 ),
   VP( 0 ),
   VPR( 0 ),
   VM( 0 ),
   VPCI( 0 ),
   AvgVPCI( 0 ) ;
if BarType >= 2 then { not tick/minute data }
   VolValue = Volume
else
   VolValue = Ticks ;

VolumeSum1 = Summation( VolValue, Length1 ) ;
if VolumeSum1 > 0 then
   VWMA1 = Summation( Price * VolValue , Length1 ) / VolumeSum1 ;
VolumeSum2 = Summation( VolValue, Length2 ) ;
if VolumeSum2 > 0 then
   VWMA2 = Summation( Price * VolValue , Length2 ) / VolumeSum2 ;
VP = VWMA2 - Average( Price, Length2 ) ;
VPR = VWMA1 / Average( Low, Length1 ) ;
VM = Average( VolValue, Length1 ) / Average( VolValue, Length2 ) ;
VPCI = VP * VPR * VM ;
AvgVPCI = Average( VPCI, VPCIAvgLen ) ;
Plot1( VPCI, "VPCI" ) ;
Plot2( AvgVPCI, "VPCISmooth" ) ;
Plot3( 0, "Zero" ) ;
Strategy:  VPCI
inputs:
   Price( Close ),
   Length1( 5 ),
   Length2( 20 ),
   VPCIAvgLen( 20 ),
   MACD_FastLength( 12 ),
   MACD_SlowLength( 26 ),
   MACDLength( 9 ),
   OBVAvgLength( 20 ),
   ADX_Len( 7 ),
   ADX_Threshold( 20 ),
    UseVPCI( 1 ), { 1 means "use for confirmation",
    0 means "don't use" }
   UseADX ( 0 ),
   UseOBV ( 0 ) ;
variables:
   MACDValue( 0 ),
   AvgMACD( 0 ),
   ADXValue( 0 ),
   OBVValue( 0 ),
   AvgOBV( 0 ),
   VolValue( 0 ),
   VolumeSum1( 0 ),
   VolumeSum2( 0 ),
   VWMA1( 0 ),
   VWMA2( 0 ),
   VP( 0 ),
   VPR( 0 ),
   VM( 0 ),
   VPCI( 0 ),
   AvgVPCI( 0 ) ;
MACDValue = MACD( Close, MACD_FastLength, MACD_SlowLength ) ;
AvgMACD = Average( MACDValue, MACDLength ) ;
ADXValue = ADX( ADX_Len ) ;
OBVValue = OBV ;
AvgOBV = Average( OBVValue, OBVAvgLength ) ;
if BarType >= 2 then { not tick/minute data }
   VolValue = Volume
else
   VolValue = Ticks ;

VolumeSum1 = Summation( VolValue, Length1 ) ;
if VolumeSum1 > 0 then
   VWMA1 = Summation( Price * VolValue , Length1 ) / VolumeSum1 ;
VolumeSum2 = Summation( VolValue, Length2 ) ;
if VolumeSum2 > 0 then
   VWMA2 = Summation( Price * VolValue , Length2 ) / VolumeSum2 ;
VP = VWMA2 - Average( Price, Length2 ) ;
VPR = VWMA1 / Average( Low, Length1 ) ;
VM = Average( VolValue, Length1 ) / Average( VolValue, Length2 ) ;
VPCI = VP * VPR * VM ;
AvgVPCI = Average( VPCI, VPCIAvgLen ) ;
if MACDValue crosses over AvgMACD
   and ( ( VPCI > AvgVPCI and UseVPCI = 1 ) or UseVPCI <> 1 )
   and ( ( ADXValue < ADX_Threshold and UseADX = 1 ) or
    UseADX <> 1 )
   and ( ( OBVValue > AvgOBV and UseOBV = 1 ) or UseOBV <> 1 )
then
   Buy next bar at market
else if MACDValue crosses under AvgMACD
   and ( ( VPCI < AvgVPCI and UseVPCI = 1 ) or
    UseVPCI <> 1 )
   and ( ( ADXValue < ADX_Threshold and UseADX = 1 ) or
    UseADX <> 1 )
   and ( ( OBVValue < AvgOBV and UseOBV = 1 ) or
    UseOBV <> 1 )
then
   SellShort next bar at market ;

 

Enjoy!

 

-fs

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Guest Tresor
Tresor

 

First off, thanks for the kind words but you can understand the sarcasm that was posted.

 

As MC also pointed out, if you had a blackbox system that produced money............ would you sell it or post it here....................... cos I'm pretty sure I wouldn't and I would hazard a guess that the rest of the TL community wouldn't either ................ the reason is.... WHY? ............ Why would you want to if it makes YOU money and giving it away or selling it might jeopordise(sp) that fact.

 

After saying all that, if you want some help in programming a strategy, I'll certainly help you out if you want, but I'm sure you'll soon find out that you're heading down the path I and several thousand others have been down.

 

Hope this helps

 

Blu-Ray

 

Hi Blu-Ray,

 

As I already posted, I like sarcasm a lot:)

 

I decided to post this thread in this forum beacuse the trading gurus here are nice and understanding people. I already observed threads like this in other forums where newbies were posting questions about strategies and indicators and the other forums' gurus where saying like this ''if you are using 5 indicators in your trading, that's 5 indicators too much. You should only eyeball the price. You only need the price on the price, etc and newbies quietely were shutting up. It is not the case so I am happy to be on this board :)

 

As it comes to a black box system. I believe noone would sell a black box system that works now. What I would be looking for would be a black box system from 5 - 10 years ago (i) to see how such a system is structured in terms of coding / logic / wording used, etc - educational purpose and (ii) to probably apply it to my exotic exchange. I am from a country you probably never heard of. The software that people use here have only 5 - 6 hard coded in dll built in indicators with no possibility of adding something more sophisticated than stochastic.

 

You would't believe it but when 5 months ago I dumped my old software and bought a new one and installed BRSqueeze my performance increased 50%.

 

Blu-Ray, thank you for BRSqueeze

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Optimisation can be a pretty bad thing. Look up 'curve fitting'. If One system produced particularly striking results it was likely that it was curve fitted.

 

There is a fine art to designing winning systems, there edges tend to come and go or they only work in certain market conditions, there's a whole plethora of issues to be faced.

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Guest Tresor
Optimisation can be a pretty bad thing. Look up 'curve fitting'. If One system produced particularly striking results it was likely that it was curve fitted.

 

There is a fine art to designing winning systems, there edges tend to come and go or they only work in certain market conditions, there's a whole plethora of issues to be faced.

 

Hi BlowFish,

 

I do realize the optimization can be really bad. that is why I am now forward testing the VPCI strategy. If no profit is shown within 1 month, I will dump this strat.

 

Would neural nets be a solution?

 

Regards

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Hi Kiwi,

 

Please could someone experienced with complex strategies comment on this assumption?

 

Regards

 

You completely missed Kiwi's point.

 

BTW, the more complex the stratregy the more curve fitted it is and further from likely real time replication of results.

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Yes.

 

What you have found is that simple strategies without context usually don't work well.

 

What discretionary trading is usually about is using context to select the situations where entries, targets and stops will work for you. And that reading of context is the thing I could never really work out how to computerize.

 

There is a class of "simple" strategies that can work well enough. Those are generally where you do something that is not obvious and thus not what other people are trying to do or have tried to do. Perhaps you fade one of the failing simple strategies in some clever way that takes advantage of the way they fail. Or something else. So its not so much replicating the discretionary as seeking a non-obvious edge. Such edges probably don't last for ever so part of it is determining the failure criteria and how you will monitor for those conditions so that you don't give all your profits back in the bad periods.

 

I think its also a good idea to seek strategies that a "big guy" couldn't do because size would work against them if you can figure something like that out. That way there is less competition for the niche.

 

Aren't the markets fun? :deal:

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Based on this conclusion I made an assuption that they underperform just because they are so simple and to be profitable one need to have a complex srategy. Now I am in a process of trying to confirm / reject this assumption.

 

No need to be overly complex - just be original and have it built around a strong fundamental hypothesis.

 

My best regards,

MK

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The Longer You Survive In This Game The More You Will Come To The Realization That The Indicator Search Is A Futile One . The Day I Removed All The Occilating, % Rate ,bla Bla Bla , Was The Day When The True Nature Of The Market Became Apparent. Different Instruments Have Different Temperments And Will React To Information Different From One Another. Screen Time Is The Best Teacher You'll Get, And Most Have No Idea What They Are Supposed To Be Looking For In The First Place. Mp And Vsa Are Both Places One Can Start To Gain Greater Understanding Of Market Structure And The Relationship Of Auction Theory And Volume( Imo ) The Key To The Market.tape Reading At Key Levels With Time And Sales Has Been Replaced With Delta Footprint For A More Informed If Not Over Informed View Of Order Flow. One Can Gain All Information Needed To Be Sucesfull In The Market From These Few Items . The Rest Is Up To You You You. No Indicator, System, Or Other Trading Method Can Ever Replace The Time It Takes To Learn How The Intrument You Want To Trade Works. After That Ther Is The Problem Of How Much Size To Take On And Stops , And How To Manage Trades,wich Is Just As Important If Not More Than Your Entry. In No Other Buisness Can You Have A Plan , Execute It To Perfection Only To Have Your Account Drained Before Your Very Eyes. Thats Where The Time Comes In . So If Your Goal Ie To Create A System You Better At Least Take The Time To Learn The Markets The System Is To Trade , And If Thats The Case Why Not Just Trade Discressionary Because As Far As I Know Most Of The Money In This Game Is Still Made By People Not Systems Or Machines, But I Could Be Wrong.

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    • Date: 10th January 2025. Why is the British Pound Declining?   The Great British Pound is the worst performing currency of 2025 so far after witnessing sharp declines for 3 consecutive days. The decline is largely being triggered by the bond selloff, lack of business confidence due to the UK Autumn budget and political uncertainty. Will the trend continue?     The GBP Index Declines 2% In 2025! Why Is The Pound Dropping? The Great British Pound is the worst performing currency of the week and of the year so far. Below you can see a table showing the Pound’s performance in January 2025 so far. GBPUSD -2.25% EURGBP +1.69% GBPJPY -1.44% GBPCHF -1.42% GBPAUD -1.91% GBPCAD -2.00% A key reason for the GBP’s decline is the latest labor budget, which is driving a selloff in UK bonds. Bonds across the global market are declining, including in the US and Germany. However, the global decline is mainly due to monetary policy. The decline in UK bond yields is due to concerns regarding the UK budget, higher costs for business and investor confidence. As a result, investors are selling UK bonds, but also reducing their exposure to the Pound. Bond Selloff and Rising Yields: Higher bond yields can sometimes strengthen a currency by attracting increased investor demand. However, this effect is unlikely when rising yields result from a bond selloff driven by declining investor confidence. The UK 30-Year Bond Yields are at their highest level since 1998 and the 10-Year Bond Yields are up to the highest level since the banking crisis of 2008. Investors’ concerns are that the higher costs for business will be passed onto consumers, triggering higher stickier inflation. As a result, the Bank of England will struggle to reduce the cost of borrowing in 2025 and foreign investors will become more cautious of operations in the UK. The short-term impact is that the UK Chancellor may struggle to meet her fiscal rules. Her budget margin of £9.9bn to avoid overshooting borrowing has likely shrunk to about £1 billion due to market shifts, even before the OBR updates its forecasts. This uncertainty may force the Treasury to cut future spending plans, but the full picture won’t emerge until the OBR's March forecast. According to reports, the UK Chancellor cannot risk higher increases in taxes and will be forced to cut public spending. The GBPUSD Falls To A 60-Week Low! The GBP is struggling against all currencies, but the sharpest decline can be seen against the USD. The GBP’s decline is partially due to the incoming president, Donald Trump, who is expected to introduce Dollar-supporting measures, but also potentially impose tariffs on the UK.   The new White House administration is likely to impose new tariffs on imports from China, Canada, and Mexico. This is likely to potentially disrupt supply chains and prompt the Federal Reserve to adopt tighter monetary policy, thereby strengthening the national currency. Some experts believe the UK will face tariffs or be pressured to adopt more pro-American economic policies. This is also something the EU will likely experience. In addition to this, reports suggest that the UK Prime Minister, Keir Starmer, and Trump supporters are not on good terms, nor agree on much including on Geo-politics. Therefore, the decline is also related to concerns the UK may be put into a difficult position by the new US administration. According to analysts, Dollar strength is likely to continue throughout the year due to the new administration’s measures, but also due to a hawkish Federal Reserve. In the latest FOMC meeting minutes, the committee stated it expects interest rates to decline at a slower pace. The Federal Reserve is likely to only cut 0.50% in 2025 and may not cut until May or June. Liz Truss 2022 Or James Callaghan 1976? Is this the first Pound crisis? The GBP has experienced many "sterling crises” in the past. For example, Black Wednesday from 1992 and after Brexit in 2016. However, there have been similar crises in the past which are very similar to the current situation. For example, the Liz Truss Budget from 2022 which saw the GBP decline more than 23%. During the Sterling Crisis of 1976 the GBPUSD fell from 2.0231 to 1.5669. Both sterling crises were due to the budget, inflation and rising bond yields. Today’s issues for the GBP and UK are very similar, however, the performance of the GBP will depend on if the new SI contributions triggers lower economic activity, inflation and if the Federal Reserve indeed avoids cutting interest rates in the near future. If inflation rises it will dampen consumer demand and the Bank of England will be forced to pause any rate adjustments. As a result, the economy may contract or stall further pressuring the GBP. However, this cannot yet be certain. KPMG experts anticipate accelerated economic growth this year, supported by monetary policy and increased government spending. They project GDP to rise to 1.7%, more than doubling last year’s 0.8%. This growth, according to their estimates, will be driven by a recovery in consumer spending, expected to increase by 1.8% compared to 1.0% last year. In addition to this, if the Federal Reserve unexpectedly opts for more frequent rate cuts, the GBP and EUR are likely to benefit. When monitoring the price movement and patterns which can be seen in the exchange rate, the decline looks similar to the price movement seen in 2022, during the Truss reign. The price has now fallen below the support level from April 2024. The next support levels can be seen at 1.20391 and 1.17992. Technical analysis for the GBP can also be viewed in HFM’s latest Live Trading Session.   Key Takeaways: The Great British Pound is the worst performing currency of the year so far, having declined by more than 2.00%. A key reason for the GBP’s decline is the latest labor budget, which is driving a selloff in UK bonds. UK 30-year bond yields are at their highest since 1998, while 10-year yields have reached levels last seen during the 2008 banking crisis. Investors reduce exposure to the GBP as the US edges closer to a new president and pro-Dollar supportive measures. The UK labour government will not reconsider higher taxes but may be forced to reduce public spending. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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