“If the wheel is an extension of the foot, then NeuroShell is an extension of the pattern-finding function of the brain,” begins Dr. Ted Achacoso, who started his trading career two years ago when he purchased the NeuroShell DayTrader. His models have become so alluring that he is now being chased by money. Friends are offering their six-to-seven figure accounts for him to trade, and a couple of them want to put together a “small” hedge fund of eight figures. “I am even receiving unsolicited checks from my family to ride on my trading account. I guess that’s the ultimate vote of confidence,” he chuckles.

Data: Ocean, Lake, River, or Stream?

“My biggest secret in creating profitable NeuroShell models is knowing the nature of the data I want to trade.” Dr. Ted likens the process to selecting the body of water where you want to fish. “While a Martha Stewart or a Ken Lay secretly can do a number on your stock overnight, countries cannot hide their GDP or unemployment numbers. That’s why I chose to trade currencies,” he explains. In addition, Dr. Ted does not trade any currency paired with the USD. “They trend,” he says, “and I am afraid of very big waves.” Rather, he trades cross-currencies, those that are not paired with the USD and move in opposite directions as a pair. His favorite is the highly volatile sterling-yen (GBP/JPY) although he does not shy away from the more docile euro-swissie (EUR/CHF). “UK’s economy cannot expand merrily while Japan’s economy contracts willy-nilly. Oscillation is inherent in the nature of these data, and therefore, repeating price patterns are more likely to appear. As a range trader, these are the waters where I fish.”

Optimizer: The NeuroShell Fishing Boat

“NeuroShell is the Rolls Royce of genetic algorithm optimizers so it will bring you to the right place where you can fish without you needing to know how it got there. You can help it along, however, by positioning it in the general area of the ocean where you want to fish. After all, it is a big ocean,” he says. Dr. Ted advocates selecting stretches of data where you can visually see or suspect repetitive patterns to be occurring. You then extend your brain’s natural pattern-finding function by letting NeuroShell extract the pattern or confirm whether or not the pattern exists. In addition, he says, “Just as you have to learn to drive a car or pilot a boat, it is better to know how to squeeze performance out of your NeuroShell optimizer rather than riding it on autopilot all the time. For example, if you need to optimize the Stochastic Slow %D indicator, set the search space from 0 to 100. There’s no sense in making the optimizer run through negative numbers.”

Indicator: Lures

“I am an indicator freak,” admits Dr. Achacoso, who has bought all of the Trader add-ons. “Each indicator is a lure that can fish for a pattern that you may not even know existed. So I think it is my duty as a trader to fill my lure box with as many relevant lures,” he says. NeuroShell is already well stocked with 800+ indicators, but he says that each new useful indicator that other traders don’t have is an edge for you. He uses the Cybernetic Analysis add-on for price pattern studies. For intermarket studies, Dr. Ted prefers the Fuzzy Pattern Recognition and Clustering add-ons. “For example, with fuzzy logic, you can say ‘buy GBP/JPY when GBP/USD is rising and USD/JPY is rising’ or with clustering, you can say ‘sell GBP/JPY when GBP/USD and USD/JPY are clustered around these values. These are true intermarket studies since they do not involve GBP/JPY at all.” Dr. Ted’s immediate excitement is Noxa’s newly released entropy indicator add-on for NeuroShell. “In less than a minute of Trader optimization, I can tell you with more than 80% certainty if tomorrow’s GBP/JPY is going to close higher or lower. How cool is that?”

Let’s Fish: Dr. Ted’s Pattern Fishing Technique

Since the Trader has so much to offer, it may appear overwhelming at first. To overcome that, Dr. Ted simply looks at NeuroShell as a three-layer cake: a data layer below, an optimizer in the middle, and indicators on top. First, he does a visual examination of the data. He identifies the most recent region of regular price oscillation and cuts this data segment on which he will build the model. Using the Trader’s prediction function, he then fishes for the price pattern within this data segment by using various indicators as inputs. His “catch” is the indicator with the highest correlation with the price, but he rejects anything below 0.8. “Kinda like throwing back fish that are too small,” he quips. Finally, he creates a trading strategy from the selected indicator. “Usually, you know you are on the right track when you fish out known oscillators, like the classic Stochastic Slow %D or the newer Ehler’s Adaptive Cycle indicator. From here, the Trader makes it simple for you to create trading strategies. If the pattern stays there for a while, you make money. The technique is adaptive because it fishes for the ‘hot’ indicator of the time segment. You don’t get stuck with constant but subjective favorite indicators,” he says. Dr. Ted uses a quadruple time frame. “The tide, the wave, the ripple, and the ripplet,” he laughs. “Range trading is notorious for open trade drawdowns, so the closer I am to my entry and exit points, the lesser my drawdown. When I tell people I am engaged in ‘risk-controlled speculation of currency’, there are three N’s for my risk control: News, Nickel – short for money management --, and NeuroShell.”

Ahoy Mate: The Ship’s Captain

“When I saw neural networks being treated as just another indicator by Trader’s optimizer, I was blown away,” says Dr. Ted Achacoso. He should know. He was a college graduate at the age of 18 and a doctor of medicine at the age of 22. Post-medically, he trained, researched, taught, and worked in three areas: minimally invasive neurosurgery, pharmacology, and medical informatics. His research, patents, software, and publications (which includes a book on biologically-based neural networks) are in the areas of biomathematical modeling of nervous systems, artificial intelligence, and distributed emergent computing. He founded and ran a group communications software company and now still provides science and technology advice to two investment funds and maintains his faculty status at the George Washington University School of Medicine.

Support: The Crew

“But you don’t have to be a physician-computational neuroscientist to use NeuroShell,” Dr. Ted insists. “Since the Trader practically drives itself, all you need is the curiosity to experiment and see where it takes you. This fishing boat is fully outfitted for deep water and stormy weather. And the crew, the technical support, is uber-responsive.” And if that is not enough? “RTFM – Read The Fine Manual! The documentation and examples contain so many precious nuggets that even experienced modelers tend to forget, “he asserts. And if that still is not enough? “Steve Ward, your CEO, called me to discuss my issues about automated trading. This reminded me of the CEO of JetBlue helping to unload baggage from his airplanes. Proof that I bought the product from the right company.”

The Final Catch

“For me, creating profitable NeuroShell models is the easy part. In less than an hour, I can teach you how to make a profitable daily model on a financial instrument that I have never seen before. My biggest problem, really, is that my brain manually overrides the signals!,” Dr. Ted confesses. “It’s funny, with NeuroShell, I fish for all of these profitable patterns and catch all of these profitable models,” Dr. Ted Achacoso concludes. “In real life, I don’t even know how to fish.”