Enhancing technical analysis in the FOREX market using neural networks

Copious test by countless professionals have proven Technical Analysis to be, at best, break-even tools, even with the finest money management techniques. Those who use only Technical Analysis in actual trades find out very painfully what whipsaws, and false breakouts are. The simple mathematical explanation for this is that Technical Analysis, as introduced by Wilder, Lane, etc., are linear, monovariate computation routines. This means that Technical Analysis is not designed to deal with non-uniform periodic, and discontinuous functions. To manage these inadequacies, one employs a neural network. The simple network described in this paper predicts technical indicators, and generates trading signals before regular technical indicators do. This gives one the opportunity to enter, and exit trades before the crowd. Tests, and actual trades, have shown that most of the time, one or two days, is all the advantage one needs.