For those of you who have been patiently waiting for MA_MomentumGA, we are pleased to announce that the wait will soon end. We have overcome the TS2000i Service Pack 2 bugs and have been able to get our DLL to work properly after being frustrated for about two months. There are still a few minor things to do, but we expect to be shipping in a week or two.
For those who are unfamiliar with MA_MomentumGA, it is a specially designed combination of MA_PredictDELUXE and MA_Momentum. A genetic algorithm(GA) is used to optimize all parameters and inputs to the prediction engine, and the result is an MA_Momentum curve that is more responsive and timely than the original. We have, in effect, found an accurate way to predict what our original curve will do 2-3 bars in the future.
In addition to overcoming our original difficulties, we have also added two different implementations of the original MomentumGA tool, which makes this indicator more powerful than ever. Users can now repeatedly run the genetic algorithm, save the results, and load up old solution sets in addition to being able to specify "retrain every X bars" as in the original conception. Let's take a look at British Pound futures:
This chart shows MA_MomGA_TrainOnce (cyan) working to forecast a 17 bar MA_Momentum curve (red). This is one of the newer versions of the tool, which trains the prediction engine once on a specified number of bars and uses the same solution set for the rest of the data. This same parameter set can then be loaded onto other charts or saved for future use.
Notice that the cyan line is a much more responsive and accurate curve than the original. We have marked times when turning points in MomGA occurred before those in the "plain vanilla" MA_Momentum. Correctly forecasting an indicator 2-3 bars ahead of time (on average) is quite a feat, especially considering the low lag characteristics of our original momentum line. This represents a definite technical edge that can be obtained by using this tool.
There are many interesting pieces of trading information that can be gleaned from using MA_MomGA and MA_Momentum on the same chart. For example, when the cyan MomGA line crosses over/under the red MA_Momentum line, we know that the short term trend has changed. These crossover signals, when supported by other techniques, can be very accurate and might make good mechanical entry signals in a custom system.
There are also some special situations that are very interesting to look at from a relative strength/divergence point of view. This happens when we have a GA crossover without price or indicator movement in the direction of the crossover. We have circled three areas on the chart where this happened. In the first case, both indicators were declining. The GA then crossed over the original, and remained above it even though both continued to decline to new lows. The GA and the original both agree on the current direction of the market, but the GA is questioning the strength of the decline. This is a good opportunity to look for a turning point and a reversal trade. There are two other circled areas on this chart when similar situations occurred. Both represented good times to look hard for a trade.
We are very excited to be able to finally release this indicator to the public. We know many of you have been waiting for it for a long time now. All three GA indicators come with the Momentum Toolkit, and will be shipped as a free upgrade to those who have already purchased this product and who own TS2000i. More next week.
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