Due to my background in computer programming, I have always fantasized about designing a program capable of extracting money out of the markets like an ATM. Every time I would train a neural network that was able to accurately pinpoint entries and exits, I thought for sure my day had arrived. Soon after those hopes would always come crashing down, because I would realize that it was only accurate on the data it was trained with. Give it some new data and flipping a coin would have been more productive.

Regardless of my past failures, I still find myself trying over and over again. It generally just starts with an idea late at night. I think to myself, I haven’t tried those inputs, or tried to predict that output yet. Then, like clockwork I set it all up and run the test then…failure again.

You would think that after so many failures, I would finally admit to myself that when it comes to trading, neural networks are a waste of time. I just can’t do it. I know the answer has to be out there somewhere. Neural networks are incredible tools for finding patterns in data. If the market truly isn’t random, then in theory a neural network SHOULD be able to find a tradeable pattern.

Instead of trying to design a neural network capable of trading on its own, I am now trying to design neural networks to augment my manual trading. I hope to create a neural network that can simply give me better than a 50-50 prediction as to the direction of the market tomorrow. By itself this may seem useless, but think about it for a minute. If with any degree of certainty you could know that tomorrow the S&P will close green, or close red. Couldn’t this information be very powerful in your trading decisions?

I am pretty sure this won’t work, but I can’t stop now.