This is a short overview video on how to use the new AI Component to produce AI Factors in Portfolio123.com (which then can be used in screens and stock trading strategies).
I was very, very skeptical about using AI in designing trading systems.
But the control this P123 AI module is giving me is what I want to see:
Point in time Database that avoids lookahead biases (traditionally a big strength of P123)
I can control the factors I want to use (I for example like everything around earnings, a bit of value and momentum): So instead of testing everything, I like to test factors that have been tested in million academic papers and I also have used in the past successfully (no, I do not like the shotgun approach, I know traders who use the shotgun approach successfully, but this is simply not my cup of tea: I go with cause and effect that I do understand!)
You can use the machine learning model you want to use (still have to do a ton of research here, but my first reach out to traders that use machine learning gave me good feedback on the standard ML Models of P123, “good, standard stuff” and “make sure you have point in time database” ;-) was the feedback).
Hold out periods
Testing the System outside of the training period of the (AI) predictors
etc., etc.
So to sum it up: it is not a black box, but you have a ton of control.
For me this will be a great time saver in the future. Still: you need to know what you are doing, I will do some more work and put out an update on these design rules (OOS makes money, not the backtest!) —>
As always I will wait for out of sample time (3-12 Months)…
Also I will analyze the buy and sells of the model, to get an idea on what the AI Factor is targeting (this is also interesting for discretionary trading).
So let us see how this will look like out of sample (rentable model is maybe on the way, after (!!!) I have a feel of OOS Performance…).
Here is a longer video version:
Gee, always learning new stuff.
Let me know if you are interested in a webinar (leave a comment!)…
All the best and best regards.
Andreas
P.S.: Network Momentum looks again a bit tired here, GEX not looking to hot on Friday. But as long this (first!) level holds on the QQQs, I am fine and stay long 90%.
I will do a market update blogpost next week!
The information on from Andreas Himmelreich / QuantStrike and this video / blog is for information and discussion purposes only. It does not constitute a recommendation to purchase or sell any financial instruments or other products. Investment decisions should not be made with this video / blog, and one should consider the investment objectives or financial situation of any person or institution.
Investors should obtain advice based on their own individual circumstances from their own tax, financial, legal and other advisers about the risks and merits of any transaction before making an investment decision, and only make such decisions based on the investor’s own objectives, experience, and resources.
The information from Andreas Himmelreich / QuantStrike and this video / blog is based on generally available and paid information and, although obtained from sources believed to be reliable, its accuracy and completeness cannot be assured, and such information may be incomplete or condensed. All performance results are hypothetical and the result of back testing only. Out-of-sample performance may be different. No claim is made about future performance.
Investments in financial instruments or other products carry significant risk, including the possible total loss of the principal amount invested. Andreas Himmelreich / QuantStrike and this video / blog do not purport to identify all the risks or material considerations which may be associated with entering any transaction. Andreas Himmelreich / QuantStrike and this video / blog accepts no liability for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained in or derived from Andreas Himmelreich / QuantStrike and this video / blog.
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