This last week was one of the most pivotal points in my trading career.
I finally took a leap of faith into the magical world of machine learning.
As scary as it might sound, I truly think this is where trading is heading.
Every day computers are getting smarter and smarter exponentially. and believe it or not,
they can actually give us scary good predictions on what the market will do next.
So I decided I ll give it the good ol TradingLab go.
I curated machine learning into an indicator. And, it wasn t easy.
It constantly looks at past years of data in real-time and uses that data in order to predict
what price is likely to do in the future. And its does a pretty fck good job at it.
I know, I know, pretty impressive right? But that s not even the impressive part.
Since this is machine learning and it uses past data to predict. The longer
this machine learning runs, and the more data it receives, the smarter it gets.
This thing is constantly learning, constantly improving, and will do all of this completely
by itself, in real time. Hell, its probably analyzed
30,000 candles while I made this intro. So you may be wondering, how does it work?
Well, without getting too nerdy, this is how the indicator works in very very VERY simple terms.
The indicator will track other popular indicator values in real-time.
These indicators include RSI, CCI, ADX, and some other popular indicators.
It will scan all of those indicators at once and all of their values for the entire past chart
history of whatever asset your looking at. Once it gathers all the data from that asset,
it will then find what price did at those specific values. Did it go up,
did it go down, or did it move sideways? So for example, It will look at rsi,
see its value. It will look at CCI, see its value. Then do this with a bunch of other
indicators. It will then note all of those values and see what price did when those
indicators were at those specific values. The indicator will then note all of that
and essentially create a "map" of what price did at what indicator values.
Once it creates this map, it will look at where price currently is and what the current indicator
values are at. We take the current values of those other popular indicators and look for
the closest data points from past chart history compared to the present. So it will basically try
to find data points from the past that look the closest to what it is currently.
But it doesn t just find one occurrence that is close. It finds 10s of thousands
of occurrences that were close. Once it finds multiple matches of
similar occurrences. It will then analyze what price was doing when the values were
similar to what they are now. Then, it will averages out all those outcomes.
Finally, it will print out its prediction of what price is likely to do.
Pretty simple right? Yeah I know, its slight confusing, but I tried my best ok.
But you need to know how it works, you just need to know how to use it.
But this machine learning essentially can give a great prediction of what price is
likely to do based on the previous data values and observed trends from the past.
And whats crazy is it does all of this within millisconds.
Mill a seconds. So when making this. I
had all this data, but I needed a way to easily present it, so whoever was using it could easily
see within seconds of what was happening. Because as of now, it was just this graph
of dots. Which is not very helpful. So I created what is called the baseline.
Now if you used my private indicator from the past before, you would of noticed we
already a baseline. Which did not have any machine learning whatsoever. Well in this previous update,
we completely upgraded it with this feature. Let s get into how to actually use this
new machine learning feature to predict what price will do next.
Actually, lets test out this new Siri based audio editing software I just got to do it.
Hey siri, Play classical music
Sorry I didn t quite get that Umm can you play some CLASSICAL music
Sure, playing rock music now. No, no, siri. STOP STOP.
Play Classical music. Did you say how to double your money?
How to double my money? What? That doesn t even sound similar to what I sai-
Playing how to double your money. Yes, you heard here right. You can
double your money? How do I do that?
Well there s a forex broker out there I personally use and there name is hankotrade.
If you use the link in my description, they will match whatever you first deposit. So
if your first deposit is $69. They will match that and give you $69.
They re awesome. If you need a new forex broker and want that
deoposit bonus. Use the link in my description. Okay, lets get back to how to use the new machine
learning feature. It s very simple.
There are 3 colors. Green, which is bullish, grey, which is consolidating,
and red, which is bearish. But there are also different
variations of those colors. For example, if the baseline is a
darker green, that is a stronger bullish signal, compared to the lighter green.
if the baseline is a darker red, that is a stronger bearish signal,
compared to the lighter red. So essentially the darker the
color, the more the machine learning is confident about that specific direction.
If you wanted a more specific answer. I also added a new metric to the trend table,
called the machine learning metric. The value will update in real-time and will
have a corresponding color depending on if it's bullish, bearish, or consolidating.
So there are a lot of different ways you can use this new machine learning feature to accurately
predict what price will do next. Now, after doing some testing,
I found this new feature works best for using it as confirmation. Rather than
entering and exiting solely based on it. For example, just entering when it turns
green, and exiting when turn red. I found it works WAY better when used
with other confluences. For example.
One of the popular strategies I like using with the indicator is using the order block feature.
I m on the one hour timeframe for this. The strategy goes something like this.
This green box is the orderblock. We want price to basically come down
to this orderblock and show it respects it. You can tell if price is respecting the orderblock
if it starts slowing down right at the block and it does not go through the orderblock. Its
okay if lower wicks go through it like this. But it would be considered a bad order block
if the body of the candle went straight through it like this.
So as you can see in this example, price came down to this order block perfectly
and show that its respecting it. But if we wanted to add that extra
bit of confirmation. We can add the machine learning tool to this strategy.
So if we look closely, the machine learning baseline went from grey, which is consolidating,
to green as this orderblock touch was happening. Showing that the machine learning is starting to
think this price action is bullish. Which is even a greater addition to enter this trade.
So we can enter here. And looks what ends up happening. The chart spikes up.
Here s a different example. Here price is coming down to the orderblock
again. And It s actually showing some signs of slowing down and that it wants to respect it.
But if we look closely the machine learning baseline is pure red.
Which is a bearish sign. So even though price is showing that it respects the orderblock,
we would not enter this trade, because the machine learning says the price action is bearish.
And good thing we didn t, because the prices falls pretty good after this.
And you can see just from looking at this chart how accurate the machine learning tool is.
It was red for this whole drop. Then turn green for a little bit on this slight rise.
And before price even drops, it turns grey, showing signs of a shift in character.
Then turns bright red as it falls. Then once price levels out and starts
losing the bearish momentum, it starts turning green, and then starts to head upwards.
This tool is fkn aswesome. But this is just one example,
there are so many cool ways you can use this. One of my personal ways I like using it,
is using it for higher time frame confirmation. What I mean by that is going on a higher timeframe
like the 4hr or daily. Then, see what the
machine learning tool is telling us. So right now we are on the 4 hour timeframe.
Right here, you can see the machine learning is pure red, but then all of a sudden it turns grey,
and even turns green right after. So now we have a bullish
confirmation bias on the higher timeframe. And we can expect today to be a bullish day.
So now we can go to a lower timeframe like that 5 or 15 minute and do our normal analysis here
but with a bullish confirmation bias. For example, only taking the indicators
long entries, and ignoring the short entries. You could even go to the settings of the indicator
and change the market consensus to bullish so you get more long trades than short trades.
Since the machine learning says it going to be a bullish day.
Or only following bullish orderblocks and not bearish blocks.
Or you could even do your normal price action trading analysis, but only looks for longs.
Another way you could use it is for take profits. For example, say if we were in a short trade
right here, which is confirmed because of the red baseline.
But as the chart moves forward, it starts turning grey, which is sign that the chart
is starting to lose downwards momentum. Then it even ends up turning green all the
way down here, which is an indication that the chart is starting to turn bullish.
So if you did enter a short up here. It might be a good time to start looking for profits right
around this are because the baseline has changed colors and is indicating a shift in momentum.
And look whats end up happening. The chart heads upwards.
And this is really just the surface of the capabilities of what this new
machine learning tool can do. Members that already have the
indicator are posting results and their strategies on whats working for them in
the indicator discord channel. And some people are posting
some really cool stuff. So im extremely proud of
this tool and the capabilities of it. And I m even more excited for you guys to find
different ways we can use it and share it with the community, so we can all benefit from it.
Because I don t want to just create indicators. I want to create a community of traders working
together to find the best strategies and tactics to use with those indicators.
So yeah, that s how I added machine learning into an indicator.
If you re interested in the indicator, you can check it out at tradinglab.ai
Or ill leave a link in the description. If you end up finding a nice strategy with
the new machine learning tool leave a comment on this video, I would love to hear it.
Thanks for watching and ill see you guys next time!