Predictable Zones in Timing Solution


These are some notes regarding the option "Predictable Zones" of the program.

When you run Timing Solutions module to create forecast based on ready solutions, you will get this window:

Set this option "On" and run the Solution. You will get something like this:



Predictable zones are shown as the colored band in the bottom of the diagram. They are presented by red/blue regions. The red regions correspond to periods where the predicted price correlates pretty good to a real price movement, while the blue zones correspond to a negative correlation. You can judge the degree of the correlation by the brightness of the color. The brighter the color, the higher correlation (or anti-correlation zones shown in blue). Actually, the anti-correlation means the period when the projection line "mirrors" the real price. In this situation, the top of the projection line corresponds to the bottom of the real price, and vise versa.  White and gray zones mean "non-predictable zones": there we could not find neither correlation nor anti-correlation between the projection line and the real price. Each line has its own independent life.  

How did we calculate these zones? It is just a pure math. The program calculates the correlation between the projection line and the indicator used as a target for Neural Network (for example, Relative Price Oscillator). Thus you can see how and when the projection line correlates to the real price (i.e., its Relative Price Oscillator, shown as the black line while the projection line is red):

This is an experimental technique. We believe that these zones give some clue when the forecast might work.

To activate predictable zones in Neural Net window, do this:


The "Window" parameter corresponds to the window where the correlation is calculated. We should find a compromise here: from one side, to calculate the correlation coefficient correctly we have to have enough price points; from the other side, if we use  too wide window, we are not able to see how this correlation changes in time.

"Resolution" - keep it as it is. If you will use the smaller value, the calculation process becomes longer, though more precise.

"Filter" - if the correlation is less than filter set up, the program displays these zones as empty spaces - "Gray Zones"