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They say "timing is everything" and this is especially true when it comes to trading. This means you need tools that can help you time your trades with high accuracy and precision. Unlike most trading tools and information, VantagePoint Trading Software does not follow trends. It forecasts them! VantagePoint is nearly 80% accurate*. Get complimentary recent forecasts; Go here.

You may have seen the trailers for a film that will be released Friday (Feb. 22) . . . the one about the President being shot while attending a summit of world leaders in Spain to deal with the global war on terror.

I haven’t seen a sneak preview of the movie, don’t know the whole plot or its probable twists and turns and am not trying to promote it or recommend you see it. All I know is that the name of the film is Vantage Point and that it shows what happens from 15 minutes prior to and immediately after the shooting from the "vantage point" of several Secret Service agents, a tourist videotaping the scene, a TV news person . . . eight strangers in all.

Which -- coincidentally?? -- is what a software program of the same name (www.TraderTech.com ) does for traders when it analyzes a target market from the "vantage point" of a number of markets most closely related to it. By using intermarket analysis and neural networks to process the data, VantagePoint -- the software, not the movie -- is able to produce predictive indicators that can make short-term forecasts of trend direction with about 80 percent accuracy over a broad range of markets from futures to forex to stocks to exchange-traded funds.

Most traders realize intuitively that markets influence each other, that no market operates in isolation and that what happens in one market as a result of events and economic developments is likely to impact on other markets. But the main challenge is quantifying these relationships and how much they affect each market. That’s where neural networks are well-suited to determine which markets have the most influence on a target market and then to determine the degree of influence these related markets have on the target market by running the data through the computer numerous times. For more articles and background material on this subject, go to www.TraderTech.com where Mr. Louis Mendelsohn, a pioneer in the field has a library of articles and research papers available without cost.

The result of this extensive testing is a set of intermarket data that can be used to produce predicted moving averages of various lengths as well as other predictive technical indicators such as stochastics, MACD, Relative Strength Index and sensitivity bands one day ahead and the next day’s predicted high and predicted low.

These predictive indicators can be used in a number of ways as traders attempt to identify a trend or spot a potential trend reversal before other traders are aware of it. Perhaps the best-known strategy involves trading crossovers: When a predicted moving average crosses above the actual moving average, buy; when a predicted moving average crosses below the actual moving average, sell.

The medium-term crossovers (arrows) are clear on the Russell 2000 Index futures chart below as the predicted moving average (blue line) crosses the actual moving average (red line), indicating a trend change. The last crossover would have you short around 705 at the time this chart was made, and a stop might have been placed at some point above 710, using traditional chart analysis.

If you cannot view Figure 1, go here.
Source: VantagePoint Trading Software 

Note that the predicted moving average tends to turn several days ahead of the actual moving average. More aggressive -- and nimble -- traders might want to jump into a trade as soon as they see the change in the slope of the predicted moving average; more cautious traders will likely wait patiently for the crossover to confirm a new trend.

In addition to the crossover indicators, VantagePoint also compares exponential and actual moving averages to each other to produce another set of indicators forecasting the strength or weakness of market trends. The Russell Index chart below shows the predicted short-term difference -- the amount the predicted 2-day exponential moving average of typical prices one day ahead is above or below the actual 5-day simple moving average of the close -- and the predicted long-term difference -- the amount the predicted 6-day exponential moving average of typical prices three days ahead is above or below the actual 10-day simple moving average of the close. (For more information on moving averages get a complimentary tutorial at www.TradingEducation.com.)

The chart also displays the predicted Neural Index, a proprietary indicator that uses "typical prices" -- the average of the day’s high, low and close -- to compare today’s actual simple 3-day moving average with a predicted 3-day moving average. When the predicted moving average is above the actual moving average, the predicted Neural Index reading is 1.0, indicating the market is expected to move higher over the next two days. When the predicted Neural Index is 0.0, the market is expected to move lower over the next two days. With only two choices, the predicted Neural Index is either correct or incorrect, which is the source of the 80 percent accuracy rate cited for VantagePoint which has been tested and documented in several leading industry publications.

One trading strategy puts several of these indicators together to find the most reliable trades. Here is what needs to come together to indicate a buying condition: (1) The predicted short-term difference moves above the predicted long-term difference, the first alert for going long. For the best indication, the predicted short-term difference should move above the zero line, which means the trade may not be initiated on the day of the crossover alert. (2) The predicted Neural Index reading is 1.0. (3) The predicted medium-term moving average should be above the actual medium-term moving average, the final step to confirm the trade. To see more examples of this, go to www.TraderTech.com.

Indications for a short position include: (1) The predicted short-term difference falls below the predicted long-term difference and is below the zero line. (2) The predicted Neural Index reading is 0.0. (3) The predicted medium-term moving average should be below the actual medium-term moving average.

The circled areas with the vertical lines show several of these potential trade areas on the Russell Index chart below.

If you cannot view Figure 2, go here.
Source: VantagePoint Trading Software

VantagePoint provides a number of moving average lengths and predicted differences that can be used in various combinations to develop a trading strategy. Your imagination is your only limitation as you test and select what works best for you, capitalizing on letting the computer and neural network technology do your analysis to find the sometimes hidden relationships among today’s global markets.

Darrell Jobman is Editor-in-Chief of www.TraderEducation.com , a web site providing complimentary information, news, quotes, chat and education to traders. He is an acknowledged authority on the financial markets and has been writing about them for more than 35 years. Visit the site and benefit from the complimentary resources of www.TraderEducation.com.

They say "timing is everything" and this is especially true when it comes to trading. This means you need tools that can help you time your trades with high accuracy and precision. Unlike most trading tools and information, VantagePoint Trading Software does not follow trends. It forecasts them! VantagePoint is nearly 80% accurate*. Get complimentary recent forecasts; Go here.