AI for Traders

An Introduction to Smarter Trading and Investing

Introduction

Traveling all the way back to the 20th century, we can see the The reality of AI is that it betters our lives in ways we see and
ultimate vision of artificial intelligence: HAL in 2001-A Space ways we do not. The way AI does and will do the above and
Odyssey. The portrait painted in that tale is not a pretty one. more is it processes massive amounts of data, analyzes that
HAL goes rogue because “he” perceives the astronauts on data much faster than any human can, and then it
Discovery 1 as a threat to the mission. The computer extrapolates reliable conclusions that, simply, make things
becomes deadly. Naturally, after the blockbuster success of work accurately.
that movie in 1968, the cultural context for artificial
intelligence (AI) was negative. People imagined a future with At a high level, AI understands historical data and applies
sentient machines that could kill. The Terminator franchise what is learned to current contexts in order to make
only furthered that unrealistic and frightening vision. predictions. Highly accurate predictions. This technology has
the potential to make every trader “smarter.”
We have come a long way since HAL in 1968 and “I’ll be back”
in 1984 with our understanding of AI. Today, the reality of AI Today, traders are faced with an information overload. Books,
has nothing to do with sentient machines threatening gurus, newsletters – all claiming to have the secret to
humans. In fact, it is quite the opposite. success. Political fear and uncertainty make it near
impossible for traders to act with confidence, which lessens
Artificial Intelligence (AI) is an analytical tool that runs through the chance of success. Until now, however, AI has been largely
the course of our day, from Google searches for the best price out of reach for individuals.
on travelto the medical benefits we receive from NASA
missions to Mars. And coming soon to a neighborhood near This eBook will enlighten you to the influence of AI in our lives,
you, “thoughtful” homes will save massive amounts of energy generally. Specifically, if you are actively managing your
and self-driving cars will take you to work and your kids to money, it will light a path to envisioning a better financial
school. AI is here now, and its influence is growing faster than future, an approach to achieving your financial goals. But first,
most people imagine. let’s get a clearer understanding of AI and its component
features, as they relate to market analysis for trading.

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To help you take advantage of the AI opportunity, we’ll explore a few themes in this eBook:

What AI, machine learning, deep learning and other important terminology mean.

The evolution of AI and why it’s suddenly everywhere you look.

Why AI for trading is essential.

What AI means for trading and investing.

How to start trading with the power of AI

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Relevant Terminology

Artificial Intelligence (AI) is the fundamental basis of computers learning to think like humans. The
idea is that software can act like our brain, can actually learn from experience. The way AI learns is
through “crunching” data, lots of data, and then extrapolating conclusions it can then apply in future
situations.

Neural networks, a biological metaphor for the idea that AI is a thinking machine, that, like the brain,
its “thoughts” travel along neural pathways. In reality, neural networks are code, a defined
programming scheme that allows computers to learn from data.

Deep learning, a powerful set of complex algorithms that direct neural networks to find patterns
within large data sets and then draw conclusions.

Algorithms are a process or, more clearly, a set of rules guiding calculations or other
problem-solving processes.

Predictive Analytics is a branch of advanced analytics that is used to make predictions about
unknown future events based on patterns in historical data.

Single market analysis is the analysis of a specific market without consideration of the influences
other markets have on that single market.

Intermarket analysis is the analysis of a specific market taking into consideration influences other
markets have on that single market.

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The Evolution of Artificial Intelligence

In the most basic sense, AI is about solving problems. Not 2 + 2 = 4. No, humans have
managed to solve these problems with our innate intelligence and the magical ability to
do more than one thing at a time. AI, in the broadest sense, is about solving functional
problems in systems that allow humans to experience the full potential of a world
rapidly transforming into a digital reality.

The Internet of Things (IoT) is a prime example. IoT is “a system of interrelated

computing devices, mechanical and digital machines, objects, animals or people that
are provided with unique identifiers and the ability to transfer data over a network
without requiring human-to-human or human-to-computer interaction.”

Simply, AI solves IoT issues involved with having your lights dim, your favorite
music start playing, and your oven preheating for baking lasagna just as you finish
your day. It can make sure your coffee starts brewing when you actually wake up,
not at a preset time. And, this cannot happen fast enough, it will allow your car to
change a red light to green when you are the only one at the intersection.

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The Evolution of Artificial Intelligence

Our personal entertainment is another realm in which AI solves

a problem – what to watch on TV. Based on your past viewing
habits, the time of day, and, even your mood, AI will stream just
the right entertainment in any given moment. Yes, it can solve
the huge problem of thinking about what to watch on TV.

AI underlies the developing digital reality we all experience today,

even the things that annoy us, such as the very specific ad that
pops up on your laptop or phone right after you searched for
just the right soccer cleats.

The point is that AI is now a significant and growing certainty in

our everyday lives. And, yes, it can produce both positive and
negative outcomes. The focus here, however, is not on what
annoys us about AI; rather, it is to look at how AI can help us
improve our lives. To that end, there is one specific way in which
it can help – as a tool for traders.

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Why AI for Trading is Essential

For the past hundred years or so, short-term traders and longer-term investors bought and sold stocks, bonds and commodities
listed on exchanges in their own home country.

Traders and investors analyzed financial markets using either ‘fundamental’ or ‘technical’ analysis. Although they look at the
markets from two different perspectives, both approaches attempt to determine the trend direction of specific primary markets
and anticipate changes in trend direction, so traders or investors can make decisions about where to put their risk capital with
the expectation of realizing a profit if their trend forecasts and timing prove to be correct.

Unlike fundamental analysis which is used to make trading decisions on the basis of underlying economic and financial metrics
affecting a particular market, the premise behind technical analysis is that all of the internal and external factors that are
thought to affect a specific market at any given point in time are already reflected in that market’s price.

In other words, a market’s current price reflects the rational collective judgment of all market participants, each with their own
information on, and insight into, that market and what they expect the market trend direction is likely to be in the future.

Over the past fifty years or longer, and well before personal computers and trading software came on the scene, a host of
mathematically-derived technical indicators, such as moving averages that smooth out the bar-to-bar fluctuations in price, were
created to offer a more quantitative and less subjective way to analyze each market’s trend direction strength or weakness and
help traders and investors determine where to place entry and exit points and set limit orders or trailing stops. These indicators
typically only look at each individual market in isolation (known as single-market analysis) using past historical data as the sole
basis for computing the values of these indicators.

Let’s take a look at a few and their limitations to uncover why traders need to rely on AI…

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Moving Averages
Perhaps the most widely-used, quantifiable, technical A weighted moving average gives more weight to the most
indicator is what is known as a moving average, which uses recent prices. For example, with a three-day weighted
the price data on each specific primary market under study moving average, the latest price might be multiplied by 3, the
from a select number of prior time periods to smooth out previous period’s price by 2 and the oldest price three
random market ‘noise’ and produce one composite number periods ago by 1. The sum of these figures is divided by the
that represents where the most recent price is relative to the sum of the weighting factors – 6 in this example. Because
average price for the selected number of periods. There are more weight is attributed to the more recent prices the
many types and variations of moving averages, each with weighted moving average is more responsive to current
their own unique configuration, smoothing characteristics price changes than a simple moving average. This means
and strengths and weaknesses which must be understood that weighted moving averages have less lag than simple
by traders. But one deficiency they all have in common, due moving averages, but may have other limitations in terms of
to the way in which moving averages are calculated smoothing characteristics.
mathematically, is that they lag behind the market and are
therefore known as ‘lagging’ or ‘trend-following’ technical An exponential moving average (EMA) is a specific form of a
indicators. weighted moving average that gives more weight to the
most recent prices, while retaining all past prices in the
A simple moving average is the average of a price series series used to calculate the average rather than dropping off
over a selected time period which gives equal weight to each the oldest prices. The current EMA is calculated by
price during that period. You just add up the prices and subtracting yesterday’s EMA from today’s price and then
divide by the number of days to get the latest moving adding this result to yesterday’s EMA to get today’s EMA. An
average value. As a new price becomes available the EMA line that carries at least a slight influence of all previous
following trading day, it’s added to the price series and the prices is generally smoother than other forms of moving
oldest price is dropped from the calculation, which allows averages.
the average to ‘move’ over time.

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A displaced moving average is a curious attempt to reverse) a position when the current price crosses below (or
overcome the lag effect of moving averages in which the above) the moving average. Or, the moving average line can
average trails behind the current price, sometimes be treated as an indication of support or resistance such as
significantly. Normally, a moving average for a given day, the 50-day and 200-day moving averages that many stock
regardless of the type of moving average, is plotted on a market analysts as well as talking heads on cable business
chart on the same day as the price data for that day so the news channels still monitor and rely upon as an indication of
two are in alignment. A displaced moving average, by an impending trend direction change.
contrast, simply shifts the moving average value forward in
time on the chart. Many traders use combinations of two moving averages in
more complex crossover trading strategies to spot and
For example, instead of overlaying on a price chart the 5-day confirm market turns. For instance, a buy signal might occur
moving average value calculated for today on the price data when a short-term moving average crosses from below to
for today, the displaced average is plotted one or more above a long-term average. A sell signal occurs when a
trading days into the future on the chart where the price short-term moving average crosses from above to below the
activity for those days has not yet occurred. The assumption long-term average.
behind displacing a moving average in this manner is that
the future period’s actual moving average value (which is not Due to their inherent design characteristics, moving
yet known) will be the same as today’s actual moving averages are changing all the time as each new day’s price
aver-age value. This creates a simplistic ‘forecast’ that is gets factored into the calculation. With personal computers,
really nothing more than a guesstimate of the future period’s traders can test all kinds of time frames and configurations
moving average value and isn’t really what I would consider easily, to find the ‘optimal’ moving averages, sometimes
to be an actual forward-looking forecast. changing their size frequently (and perhaps even too
frequently) or having different moving average parameter
Once a specific moving average type has been chosen, values for each stock or futures market being tracked.
rule-based trading strategies based on the moving average Moving averages can also be combined with other features
can be created, such as ‘Buy’ if today’s closing price crosses such as sensitivity bands or Bollinger Bands® surrounding
the moving average from below to above, or ‘Sell’ if the the moving averages to help smooth out the data further,
current price crosses the moving average from above to with the hope of minimizing false or premature breakouts.
below. Moving averages may be used to liquidate (or
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Moving Average Convergence Divergence (MACD)
MACD uses moving averages but adds several features to their basic crossover design. MACD plots the difference between a
long-term exponential moving average (often 26 days) and a short-term exponential moving average (often 12 days) and then
compares this line to an exponential moving average (often 9 days) of this difference, which is generally used as a ‘trigger line’.

Crossovers of the two lines themselves can be used to identify trading opportunities. When the MACD line crosses below the
trigger line, it’s a bearish indication; when the MACD line crosses above the trigger line, it’s a bullish indication. The MACD line
crossing above or below a zero line indicates the strength or weakness of a market and can be used to trigger a trading signal.

The relationship of the MACD line to the trigger line can also be used to generate trading signals. If the MACD line pulls away
from the trigger line dramatically, it indicates the market may be becoming overbought or oversold after a strong move and is
likely due for a correction that will bring the two lines back into a more normal historical relationship.

One of the applications of MACD, as with a number of other technical indicators, is to identify divergence between actual prices
and the indicator itself. If the MACD turns positive and makes higher lows while prices are still moving lower, this bullish
divergence could be a buy signal as MACD detects strength that is not yet obvious by looking only at the price chart. If the
MACD makes lower highs while prices are reaching new highs, this bearish divergence suggests possible weakness and a
potential sell signal in the making. Given its moving average foundation, MACD is also considered a lagging indicator. It tends to
work best in markets that make broad trending moves but doesn’t perform as well under choppy, volatile trading conditions.

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Momentum Oscillators
Momentum oscillators measure the speed at which prices move over a given time period, presumably giving the trader insight
into the strength or weakness of a trend as it unfolds. Momentum oscillators attempt to spot market turns in their early stages
and are typically scaled in the range from 0 to 100.

Momentum oscillators show how current prices compare to previous prices and provide clues about overbought or oversold
conditions that suggest a possible impending change in trend direction. These oscillators can also indicate when a price move
may be running out of steam or is likely to make a reversal.

These indicators are more reliable in non-trending markets when prices move up and down with no clear trend direction.
However, in trending markets, these indicators may give a buy or sell signal soon after the change in trend direction and then
just remain stuck on that signal as long as the trend continues.

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Stochastics
The premise of the stochastic oscillator is based on the One of the limitations of the stochastic oscillator, like that of
position of the current price relative to the price range during other momentum oscillators, is that once the oscillator
a specified period. When prices are declining, daily closes suggests an overbought or oversold condition, it can’t tell you
tend to accumulate near the extreme lows of the day. When how much further the market might move in that direction. It
prices are rising, closes tend to cluster toward the extreme may continue to show a buy or sell signal for days or weeks
highs of the day. The stochastic oscillator is designed to use at a time if the market is trending. To reduce the chances for
these price tendencies to indicate potential oversold and acting prematurely on an early signal, some traders require
overbought market conditions. both the %K and %D lines to be pointing in the direction of the
predicted price move while above the designated overbought
Stochastics are measured and represented by two threshold or below the oversold level.
components, %K and %D. The %K line – the faster, more
sensitive indicator – is calculated by taking the close minus As with other momentum indicators, one of the most useful
the low for N periods and dividing that number by the high signals with stochastics is divergence between %D and price,
minus the low for N periods and then multiplying the result which occurs when the %D line makes a series of lower highs
by 100 to put the final figure on a scale ranging from 0 to while prices make a series of higher highs or the %D line
100. Some traders prefer slow stochastics, a line produced makes a series of higher lows while prices continue to make
by calculating a short-term moving average of the %K line. a series of lower lows.
The %D line is a long-term moving average of the %K value.
Even though momentum oscillators are often less reliable
A high stochastics value – usually above 70 or 80 – during trending market conditions, they can still provide clues
indicates the market may be overbought; a low stochastics about future price direction because of divergence – that is,
value – usually below 20 or 30 – indicates the market may while prices may hit a new high or low, the indicator fails to do
be oversold. When the %K line crosses the slower-moving so. This divergence is a visible indication that the indicator is
%D line in overbought or oversold territory, this suggests that suggesting some underlying strength or weakness not yet
the market might be about to reverse direction. revealed by the price action on a price chart.

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Relative Strength Index (RSI)
The Relative Strength Index is designed to smooth out
fluctuations in price movement and provide a measure of
market strength or weakness on a constant scale ranging
from 0 to 100.

To calculate RSI, take the average of the up closes and the

average of the down closes for a given time period (typically
14 days), then divide the average of the up closes by the
average of the down closes to get a relative strength figure.
Add 1 to that relative strength figure, divide the sum into 100
and subtract that result from 100 to get the index reading.

As with other indicators, a high RSI reading – typically above

70 – suggests an overbought condition or the potential for a
weakening bull market. A low RSI figure – usually below 30 –
suggests a market that may be oversold or has the potential
for a weakening bear market; A move to those levels is not an
automatic buy or sell signal but rather suggests that the
market may be close to making a top or bottom.

Also, as with other indicators, divergence between the

direction of RSI and price may be the best use for RSI – for
example, when prices reach new highs following a bull
market setback, but the RSI fails to exceed its previous highs.

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True Strength Index (TSI)
The True Strength Index is another momentum oscillator. It tends to reflect smoother changes in its readings because it
double-smooths momentum values (the difference in price between one period and the next) by using two moving averages.
The price differences or momentum act as a proxy for price and its values are more sensitive than just using price. These
values are then slowed by using two smoothing moving averages.

As a result, TSI more closely aligns with price highs and lows in defining a market trend and isn’t as erratic as many other
indicators. Buy or sell signals occur when the TSI crosses above or below the TSI signal line. TSI signals can be especially
useful in identifying divergence between two related markets such as comparing two stock indexes to each other.

Other types of single-market technical indicators highlight specific price or time targets. These include Elliott Wave, which
features a five-wave sequence projecting the size and duration of market moves to arrive at specific price targets; Fibonacci
levels, which provide retracement and extension targets based on a mathematical series of numbers and ratios; and cycles or
seasonals, which identify the repetitive price movements of a market and project the timing of price highs or lows but not
necessarily the amplitude of a move.

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Indicator Deficiencies – A Case for Smarter Data
No matter which single-market technical indicators or visual type of data point - price. With price as the core input, use of
price pattern analysis on charts, like head-and-shoulder, multiple indicators for confirmation may actually be
pennants, triangles, etc., are used they all have obvious redundant with one another. So, combining indicators that
deficiencies that can negatively affect your trading results in have similar characteristics as part of a trading strategy
today’s globally interconnected markets. Here are just a few offers little if any additional insight into market dynamics.
of the more obvious deficiencies that need to be overcome:
All prices used in computing the values of these types of
Chart pattern analysis is very subjective and limited to technical indicators have already occurred in the past, so the
looking only internally at one primary market at a time in indicators, due to their design and construction, lag behind
isolation. This is a two-stage process. First the trading current market conditions. In fast-moving markets, where
software reads in the historical price data on one specific the price is on the verge of rising sharply or falling
market and depicts the raw data on a price chart. Then, the precipitously, this lag effect can be very pro¬nounced and
trader or investor must visually look for chart patterns within costly because of the delay in indicator response due to its
the chart as a potential clue to that market’s future price lagging characteristics. Bottom line: the math underlying
movement. This process is very imprecise and subjective these indicators is not predictive in nature.
since it relies entirely on human observation of the chart in
order to identify the chart patterns in the data. My question An indicator may work well under some market conditions
is why not let the computer look directly at the numerical but not others. For example, a moving average works well in
data to find hidden patterns which might have predictive trending markets but less so when the market moves
value regarding the future trend direction of that market and sideways or chops back and forth during periods of
thereby cut human involvement out of the process. increased volatility. A momentum indicator such as
stochastics works better under choppy conditions but
Single-market technical indicators typically are based on one doesn’t perform as well during trending markets.

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Using single-market, trend-following, lagging indicators, their wealth, too many individual traders, particularly
you’re unlikely to get into or out of a position exactly at, or newcomers to the markets and those with small accounts,
perhaps not anywhere near, the top or bottom. The best you give little or no thought to the implications that the
can hope for is to capture a significant portion of a move globalization of the financial markets has on the way that
because these indicators only kick in after the turn has taken traders should be looking at and analyzing individual,
place. specific markets before placing trades or adjusting stops.

For decades, even before the advent of personal computers Even today, most traders continue to focus their analysis
and the emergence of a trading software industry, traders solely on each individual market in isolation, performing
and market technicians have made various modifications to single-market analysis using these trend-following, lagging
these types of technical indicators in an effort to reduce the indicators, an approach that has been the mainstay of
lag effect and make them more responsive to current market technical analysis since before the introduction of personal
conditions. But, so far these efforts have been futile. For computers and trading software.
example, the shorter the length of a moving average, the
more sensitive it will be to short-term price fluctuations, Yet, despite their serious and well-documented limitations,
meaning less lag than longer moving averages. But, the price single market chart pattern analysis and trend-following,
you pay is less smoothing or filtering out of ‘noise’ in the raw lagging technical indicators are still widely relied upon by
data with a greater chance of getting whipsawed. traders and investors to identify trends and determine when
These trend-following, lagging, single-market indicators changes in trend direction might occur. The subjective
often generate false or premature trading signals that can eye-balling of price charts to find patterns thought to have
wipe out your trading account’s capital with whipsaw losses. predictive value as well as the lag effect inherent with
A moving average, for example, may provide several trend-following technical indicators has presented one of the
crossover signals that get you in and out of positions several biggest challenges that technical analysts and traders have
times at losses before giving you a valid signal at the been trying to overcome for decades. What is needed,
beginning of what may, if fact, become a longer-term trend. though, are truly predictive indicators that actually lead
rather than lag the markets and which also take into
While the global financial markets offer unprecedented consideration the impact of related markets.
opportunities for traders and investors to build and protect

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The Evolution and Reality of AI and Trading

There is simply no way around it – as much as some things are

getting cheaper, other things are getting more expensive. Our
phones, computers, watches, and streaming entertainment are
getting cheaper and cheaper as digital technology takes hold,
but our homes, our children’s daily needs, the cost of our
children’s education, our vacations, and our retirements are
going in the opposite direction. The overall cost of just living our
lives is rising. So how can AI help with this reality? In the most
basic way, AI in our cars can reduce fuel costs, or IoT in our
homes can reduce energy costs, or a Google search can find
the cheapest airline tickets. These cost savings help, for sure,
but for the bigger ticket items, such as buying a home,
preparing for a college education, or looking toward a
comfortable retirement, the ability of AI to process data and
make predictions is what will truly make a difference.

Practical thinking drives people toward practical solutions.

Practically speaking, investing for the future is the only way to
get to where we want to go financially. There are practical
solutions for investing – institutional 401k, paid financial advice,
mutual fund IRA, to name three. These work, but can they
produce the financial return necessary to get you where you
need to go in life? Perhaps, but why not look at the question
differently? How about you ask: “How can I improve my own
financial management?” Intelligent trading is the answer.
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As a tool for traders and investors, AI has evolved considerably since its rudimentary beginnings in the 1980s. Back then, “AI”
was merely a computerized computational tool, albeit one that changed the landscape of trading by recognizing the limits of
single market analysis in the burgeoning Information Age and opening the door to intermarket analysis.

Today, AI is a pervasive force in the trading and investment world. Money managers, stock brokers, mutual funds, hedge funds,
professional advisors, day traders, and swing traders all are subject to the reality that AI underlies the daily movement of money
and markets around the globe. Everyone is looking for an edge and software that utilizes AI is that edge. Mind you, this is not a
new phenomenon.

The application of software technology in optimizing market trading tools has been around since the early 1980s. Lou
Mendelsohn, an early pioneer in trading software, picked up on the evolutionary trend creating the first commercially available
strategy backtesting and optimization trading software for personal computers, ProfitTaker Futures Trading Software. By the
mid-1980s software-driven, technical analysis had become the standard for both stock and futures traders. Mendelsohn’s early
adoption of software for trading led to the next generation of his “intelligent” trading software in the early 1990s that had two
key characteristics – intermarket analysis and neural networks.

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Intermarket Analysis and Neural Networks
Massive data processing and predictive analytics underlie processed. More importantly, intermarket analysis becomes
both intermarket analysis and neural networks in trading a viable analytic tool only when the analysis of the
software. Neural networks perform because of AI, the inter-related markets creates a “prediction” of market
underlying computing power that allows for processing movement. This is where AI and neural networks come into
massive amounts of data. Intermarket analysis works play.
because of AI, the underlying intelligent computing that
allows for predictive capability. AI is the key, and a historical In today’s trading world, if you are not utilizing software that
perspective will help to see why. a) relies on AI-based, neural networks to analyze interrelated
markets, and b) delivers a highly accurate forecast of market
Before intermarket analysis existed, traders analyzed single movement, you not only lack an edge, you are at a
markets with hand-plotted charts. It was all about the disadvantage.
patterns surrounding that single market that mattered. Even
though other markets influenced that single market, to So, here is where we are. If you want to create a more
analyze those influences was a monumental if not powerful financial future, you need to take control. This can
impossible task. Enter software in the age of global markets. happen in two ways – trading or long-term investing. You
can rely solely on the latter with your 401k, your IRA, a
With the advent of the internet, the influence of one market mutual fund, or a financial advisor, true, but increasing your
upon another increased exponentially. As the Information return on investment over time is enhanced greatly if you
Age progressed, single-market analysis became less can successfully trade in the short term to invest in the long
relevant. It became increasingly apparent that Mendelsohn’s term. And the way you successfully trade in the short term is
intermarket analysis approach was the future. The issue learning how the markets work, developing discipline, and
back then, as it is now, was and is software. Intermarket finding the right tool, which we now know is AI-based trading
analysis works best when massive amounts of data are software that delivers highly accurate market predictions.

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Intelligent Trading Looks Like This
The fundamental idea underlying predictive analysis in finan-
cial markets is the algorithms that guide the neural networks
data crunching define a process that identifies patterns of
“behavior.” The AI then interprets market “movement” to
predict market direction based on an analysis of those pat-
terns. Now, what makes the predictive analysis highly accu-
rate is the data collected and analyzed is data that correlates
to that particular market.

For example, if you are looking at an energy play, say in oil

prices, then the AI would pull in data on forex and oil refinery
markets, possibly. Analyzing movement in those markets
relative to the movement in the specific oil market gives the AI
enough information to make an “educated” guess as to market
direction. The accuracy factor comes into play because of the
massive amount of data that is analyzed. Imagine data from 25
correlated markets analyzed relative to a specific market. Given
the ability of the neural networks to find the patterns, the “educat-
ed” guess becomes a highly accurate prediction of market direc-
tion.

Data, data, everywhere, but none of it is meaningful. Unless, of

course, it is analyzed meaningfully. This is what AI does. It takes
the powerful ripple of influence of market upon market, defines its
course of travel, and then points to where it will likely hit the shore.

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What AI Means for Your Trading

Trading is a highly competitive world defined by the reality that winning means someone must lose. Given the nature of greed,

“
you can bet everyone trading in the market is doing everything he or she can to gain an edge. Artificial Intelligence trading
expert, Lane Mendelsohn, says "Artificial Intelligence is no longer the future; it is the present. Traders looking for real
success in the markets need to incorporate this technology if they want to gain an edge.
”
AI-based software creates a larger pool of viable plays from which you can select your trades. Applying filters based on your
understanding of the overall market movement and the movement in a specific market segment (say energy) allows you to
“whittle” down a volume of potential trades to the most viable plays, again, based on your market perspective.

Risk reduction is a hallmark of successful traders. AI-based software reduces the risk, as it clearly defines market direction,
which then gives you the opportunity to filter through those trades to find the best of the best, the trades with the highest
probability of success.

What Does AI Software for Traders Look Like?

As stated, trading is a competitive world, so every decision you make is crucial to success. And since you can’t win on every
trade, the goal is to have a win/loss ratio that is skewed in your favor. One way to get that win/loss ratio up there is to find
AI-based analytical software that can deliver a high probability of success.

Meet Vantagepoint Software. This incredibly powerful, AI-based program utilizes neural networks and intermarket analysis to
predict short-term market movement. This predictive software has been delivering success to traders since 1991, a proven
track record that speaks for itself. Over that span of time, various independent tests have shown Vantagepoint to produce up to
an 86% accuracy rate in its predictive analysis.

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Vantagepoint is loaded with useful features, for sure, too many to list here, so here are four that speak
to the power of the software:

• Precise forecasts of a trend’s direction over a two or four-day period.

• Predictions of the next day’s high and low.

• Alerts on whether the market is expected to make a top or bottom over the next 48-hours.

• A suite of other predictive leading indicators and technical tools that identify optimal entries and exits.

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Conclusion
We are in the Age of Data now, and AI is the natural evolutionary step to deal with all that data coming at us. Trading in today’s
world is, well, about collecting and analyzing market data, and then extrapolating market-direction predictions with a high
probability of success. Vantagepoint utilizes AI to do this task extraordinarily well.

Remember the IoT, the Internet of Things? AI is the essential piece that makes it all work.

As electric cars become more powerful, electrical demands for charging at home will rise. Your home, networked on an
AI-based system will, over time, collect data from all your devices utilizing electricity. It will then factor in your use of
those devices at whatever times you use them, to whatever degree you use them. It will discern your patterns of
behavior around your devices, so when you plug in your car, and it draws 440 volts of power, the AI in your network
will quickly predict your power usage needs and then adjust to accommodate the power draw. Now, here is
the beautiful thing. Based on your patterns of behavior relative to electrical usage, your home will
flawlessly operate without interruption as your network adjusts based on what it has learned about
your behaviors. Simply, it will accurately predict the direction of short-term power needs to have
the power available when needed for any device when it is utilized.

VP collects data on some 25 correlated markets, analyzes the patterns within those
markets relative to the particular market you are viewing, along with the patterns
in your chosen market, and then it accurately predicts the direction of short-term
movement in that market. Only AI can pull this off with great accuracy.

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AI Has the Power to Transform Your Trading and Your Life

Ultimately, what we all want is to live a good life, to have enough money to take care of our families, to take good vacations, to
pay for college educations, to live in a beautiful home, and to live well when we stop working. To achieve this, we need to be
successful with managing our own financial futures. We need to be smart with our money. Being an intelligent trader is one way
to achieve your financial vision, whatever that might be.

AI is evolving to positively affect our daily lives in everything we do. The ultimate aim of this technology is to simplify and
improve the quality of our lives. To do this, it must learn who we are, how we live moment to moment, how we behave day in
and day out. As AI learns about us, it will learn what we like, when we like it, and how much of “it” we want in any given moment.

Traders have an incredibly opportunity to take advantage of what AI offers in your trading life. There is nothing futuristic or
unrealistic about the power of AI to transform your trading into a successful venture that will bring you the things you want in
life for you and your family.

Just as AI is transforming our daily lives, it has already transformed predicting market movement. What once was inaccurate
hand-plotted charts for a specific market created solely in the context of that single market is now AI analyzing dozens of cor-
related markets to arrive at an accurate market-direction prediction for a specific market.

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WHO IS VANTAGEPOINT AI?
Founded in 1979 by Louis B. Mendelsohn, a prominent technical analyst and trading software
pioneer, Vantagepoint ai was the first trading software developer in the world to introduce
strategy back testing capabilities in trading software for personal computers.

Headquartered in Wesley Chapel, Florida, Vantagepoint ai remains at the forefront of trading

software research and development. Our work is rooted in the application of artificial intelligence
technologies to intermarket analysis of today’s globally interconnected financial markets.

Since the introduction of its first trading software in 1983, Vantagepoint ai has grown into a
multi-million dollar, Inc. 500, trading software company with customers in more than 120 countries.

For more information, visit www.VantagepointSoftware.com or connect with us on social media

TEST DRIVE OUR POWERFUL, PATENTED AI-BASED TRADING

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