2-12-18_Mo_6.30pm_BackTests02_Software_Security(305)OnTrial.co=(305)668-7245 A Rush's Live Broadcast
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Remember when we talked about blockchain? There’s distributed ledger. There’s a number of companies right now setting up ICO, initial coin offering. People are trying to do that and use blockchain technology. There’s one company called steemit.com. they’re trying to do a coin offering where they will give credit for blogging. If you set up an account with them and other people approve it, you get raised and voted on it. Type in steemit.com/@thepsychco. The first article there is our broadcast. Anytime you want to see what’s happening in class, you can go to steemit.com/@thepsychco and go to the top and that is what’s broadcasted. You can even set up an account too and broadcast it. Let’s do some housekeeping. Under assignments, did anyone do TG2? There was an issue with the same questions. No one got extra credit for that since it was giving the same questions. I’ll give you multiple attempts for the new one. Let me go into it so you don’t want any of your attempts. This is the tg2a, it talks about the types of system software. We have 10 questions there. Put that in your notes that for next time, you’ll do tg2a. I’m going to edit the test options and next to “make link available” I’m going to click no. So, we should have tg2a and quiz 4 available. I’m also going to make Chapter 5 quiz, which is about data, available for next week. So, we have quizzes 1, 4, 5, and 2. The other thing is, I’m going to type in Miami.edu/Lynda.
Does anyone know excel? Next time, we’re going to do work similar to this in excel. Think about excel and think about a function. A function is a built-in formula. An indicator is similar to a built-in function. So now when I’m going to Ninjatrader right here, I’m going to skip this. A strategy can be a combination of indicators with logic to buy and sell. A strategy could be one or more indicators combined with logic having the computer buy or sell, automated trading system. An indicator alone can give me a signal and an automated trading system will allow me to buy and sell. What’s the first thing I need to do to connect to live data? I would click connect and click on end-of-day Free. I like to pay for things that are good but if we don’t know what we want, why pay for it? So. I’m connected to end of day data. Now, I want to go to a new chart. I click on new, then chart. If I go to the chart, then I can pick any one that I want. Next time we can even forecast some cryptocurrencies. I’ll start with my DOW, we’ll do BA. I’m going to make sure that my Day is type. Then you click okay. I know that I have daily, and it looks like it’s a bit choppy. Before, I had strategies and I said my strategies were ways in which the combined indicators automatically have the computer buy and sell. The computer does the buying and selling. I’m going to hover over here and you see I have some built in strategies, I can also write my own and download some other ones. Anyone remember what MA stands for? Moving average. So, I have a sample moving average. We have two sample moving averages, one is fast and one is slow. Fast is 10-day, slow is 25. I want to enable this chart so what do I need to do if I want to enable? I’m going to set this to true, then press apply. It says my order has been confirmed and I just click okay.
Now I have this area where I have two lines, a gold and a solid green here. If I look at this gold line here and press and right click to look at properties, this is my slow here of 10 days. At this point, this SMA has a color in orange. If I wanted to change that color, I could just change it right here. Now I have these little dots here. The green means you cross below. The computer bought it at 240.99 it sold at 266. Right here it says sell short. And then it sold at 176 and got out at 178 higher. So, it looked like it went down and I stayed in it too long. Did I make money or lose money if it’s dotted red? I lost. My losses seem to be less than my wins. I can do a performance report. I can click on strategy/performance and then SampleMACrossover. If you get all 0’s, make sure it’s labeled Daily. Now the question is, what are indicators. Those of you that are doing it with me, see where my cursor is that says indicator. These are all my indicators that I have. Some of these, we may even know. Let me go to regression channel. Who’s ever heard of regression. Basically, my regression channel means I calculate. I’m to click on it here and click apply and okay. You see here these two blue lines, this is my regression channel. What people are going to look for the indicators is the many outbreaks. Do you see how this broke out of this one and the resistance here. Let me go further and look for something called r^2. I’m going to click new and do 2r^2. R^2 shows me how confident I am with my predictions. You can put in your notes that r^2 ranges from 0 to 1. What I can do here is I can move the r^2 on top of my strategy. So, r^2 is an indicator. And if I can interpret my indicators, then I can write a strategy to tell the computer when to buy and when to sell. So, now we have to figure out what is happening here. On the very bottom, it’s going to be close to 0 and on the very top, it’s going to be very confident. I want to look for a pattern to see what happens. This looks like I got in here when it was pretty high and notice that when it was low here, it seemed to reduce. And I got out when r^2 was going down. Let’s look at the one I lost money on. Notice that I bought it at a time high and I lost when the r^2 was going up. So, maybe my rule could be that when my r^2 is declining after it reaches a peak, I can possibly sell. When it’s rising, I can choose to sell. Now when I go to buy, I can do my algorithm. This is an indicator that I can go on top of this. Then I can do my strategy performance, historical and real time. I export it to excel. And then at this point, I have my long trades. I have all my trades including my short trades. What do I do with my algorithm now? My profit per month was 5%. In my longs, it made 6% and in my shorts, it made negative 0.25. Am I profitable then in my longs?
In this case, my large is losing trades here. Why is this information helpful? Why would I want to know how well this strategy did? It’s so I can see how well my strategy works. I could also use a stock broker. It would be simpler but the question becomes, what if your stock broker wants to use some of these strategies. There’s a group of people that create these strategies and they have the computer do the buying and the selling. It’s not that you personally will create these strategies but you’ll know what is behind these strategies. A number of brokerage houses have their own strategies and you’re investing in a number of strategies. What happens in this FinTech area is I’m showing you what it takes to use these strategies. This is an area of software development. Remember when I talked about Quant Traders. The CISO was talking about Quant traders with 450k, some companies start them off with 200K. Next week, we’ll do similar things in excel. So, in the historical strategy real time performance, once you have it in excel, you can then save it with the date and you can save your report. You will then want to compare by date and see if you’re still making money. And then try it via other companies.
We’re going to have an exam on Monday, March 5. On the 26th of February, I’ll spend a good part of the session on reviewing for the exam. I want everyone to do well. I don’t want to have any surprises. There will be two parts to the exam. There will be a multiple-choice part similar to the quizzes and another part will be open-ended. We’ll go over types of questions for open-ended. One may be on blockchain and one on automated trading systems, the difference between indicators and strategies. Let me go back to NinjaTrader. What is the source code called in NinjaTrader? NinjaScript. NinjaScript is just a version of java, and for windows, c sharp. And we can edit the NinjaScript. Notice that we have an indicator or a strategy. You can even write your own indicator here which usually people don’t need to do. This is called source code. The source code has indicators called SMA, which stands for simple moving average. If I started with this line here, it’s saying to go ahead and add this SMA indicator and this part is the logic. It says if it crosses above, enter long and if it crosses below, enter short. If we wanted to very simply just take our long, what would we do in this logic? We’d get rid of the short.
What’s the difference between a public and private blockchain. Who’s invested in Bitcoin? Is Bitcoin public or private? It’s public since it’s open to everyone. It’s going to be immutable, which means it can’t be erased. The ledger is going to be distributed. It’s going to be peer to peer and it’s open. In terms of trust, distributed ledger is a way in which people are taking out the intermediary. There are multiple copies of that ledger. In that case, auditing and accounting will change in that blockchain technology. This technology is very new. It’s in its infancy stage. The world isn’t going to change completely in this blockchain. A lot of companies are deciding to use blockchain. Let’s say will those shipping containers that use all these different sources and intermediaries will most likely be affected by blockchain. Look up KYC in banking and AML. KYC means Know Your Customer. This came out after 9/11. They were afraid of terrorists taking information. If I have KYC, banks are interested in Blockchain technology. Would they want an open blockchain that’s anonymous? They wouldn’t. but could it help them to be more efficient. They’re setting up block chains in banks. All your identification including passport, birth certificates can be stored on a block chain and you can be assured that it’s there. I’m going to have someone form the FBI come in and talk about how we’re the fraud capital of the world. This includes in healthcare, in money laundering.
Linux is an operating system that is called open source. All the other operating systems are closed, which means you can’t modify it. Linux can be modified. If it’s open source, how much do you think it costs? It’s free. So, basically this person wrote these books on linux. It wasn’t the average reading that came up. In the very beginning of the internet and there was hardly a browser out there, he called me and said I got a book deal. It was the yellow pages of the internet. There were so few websites out there that he created a book where he went and reviewed each website that he thought was good. This is what block chain is doing. At the very beginning where people were getting excited about the books, and out of that, came real technology. On the private block chains, I can know the customers and make them aware of it. It doesn’t need to be anonymous. The first users of Bitcoin were the drug dealers. In terms of anonymity, you don’t need to have it. A question for your exam could be what does block chain do? And talk about one of the block chaining industries like Fintech.
Which groups have not completed the NinjaTrader programs? What I’m going to do now is work with people that had problems.
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software security ninjatrader backtests02