Alan Turing (1912-1954), the famous computer scientist and mathematician, put all the theoretical basis of computers, long before their existence. He also reached the borders of Artificial Intelligence and finally at his paper “Computing Machinery and Intelligence” in 1950, he formulated a very famous question: Can machines think? At the same paper he understood immediately the difficulty to define what thinking is so he rephrased his question.
Most traders have some very obvious questions: What is the significance of a time-frame? Why a candle must start and end at a specific time? Why a bar should be constructed by 5 minutes period and not by a 4 or 6 minutes period? Is the bullish candlestick that we see really bullish or if we shift the time 1-2 minutes it will become bearish? What if we have build strategies based on such aspects?
All these are really interesting questions. The obvious parameter that we should consider is time. Time in trading has almost no meaning unless it’s a self-fulfilling prophecy because all the traders are looking at the same chart. OK let’s be more realistic, time has some significance because people are most prone to do things at integral times. Probably not many of us book a date at 10:52, we would prefer 11:00 or 10:30 or 10:45. Human mind can think easily with integral numbers rather than fractions. Also, most of the market news are released at integral times and most of the time specific automated systems are programmed to open or close positions at integral times.
Some Japanese guys had an idea of ignoring the time in a chart by replacing it with specific market movements. The Renko chart was born from the Japanese word “renga” that means “brick” and so it is as you can see at the following image:
Machine Learning is a magic word that has invaded to our lives and it seems that most people consider it as a magic solution that will resolve all the issues of the humanity.
Same happens with the trading community: a large number of scientific papers have been released recently regarding the ability of machine learning to predict the markets. Before we give our opinion about machine learning and financial markets, let’s present some basics and fundamentals of machine learning.
They are not exactly over , because you cannot teach an old dog new tricks and certainly there are many old dogs still in this market. BUT the “Churn & Burn” has run its course as a profitable business strategy & tactics.
