The first step in creating an artifical neural network brain is to gather the data around which the structure of the brain will be formed. Since we are trying to create a brain that will know how to trade the markets we must gather market data.
However, we cannot simply collect a mass of data and dump it into our neural engine to create the structure of our brain. We must gather the data in the format which we want the brain to process that data and eventually the same format we want it to create output in. In other words, we’re not only telling our brain WHAT to think, by giving it raw data, but we must tell it HOW to think, by formulating that raw data into an intelligable configuration.
In this case, our intelligible configuration is patterns. We gather data in segments, each segment consists of a number of bars set by the trader in our proprietary collection indicator which comes with all of our packages. That grouping of bars is collected in relation to the next bar that comes after the grouping – we will call this the future bar. When we’re collecting market data the future bar is known, because it is all historical data, it is the next bar after the grouping. The idea is that the neural network brain will find complex patterns in the bar grouping and use the information collected, including the ‘next bar’ after the grouping, to determine which complex patterns preceed the result of the next bar. During actual trading that result will be the future bar which in effect makes it possible to know with a high degree of accuracy the direction of the market before it happens.
The collected data is extracted into a spreadsheet which displays price data as open, high, low, close (OHLC). The OHLC of each bar is collected separately and placed in its own column. In the example above each row represents 3 bars in total. Therefore, the columns represent hundreds or thousands of bars collected going back into history.In addition to OHLC you can also collect the values from almost any indicator you select, which will essentially give that indicator the ability to ‘think’ based on changing market conditions and predict the next value.