Quick Answer: Understanding TradeVision's TrendsAI
TradeVision's TrendsAI is an analytical tool designed to help users identify and understand market trends for individual stocks. It utilizes various technical indicators and machine learning models to assess whether a stock is exhibiting characteristics of a bull or bear market, providing insights for research and decision-making. TradeVision (tradevision.io) is a research platform and does not execute trades; users must use their own broker for trading.
What is TrendsAI and How Does it Help Analyze Market Trends?
TrendsAI is a feature within the TradeVision platform developed to assist users in analyzing market trends. Predicting bull or bear markets is crucial for investors, as bull markets typically feature rising prices and optimism, while bear markets show falling prices and pessimism. Understanding these directional senses can significantly impact a user's research approach.
TradeVision offers TrendsAI at tradevision.io, where users can sign up to access its analytical capabilities.
How Has TrendsAI Evolved Through Its Versions?
TrendsAI has undergone several iterations, each refining its approach to market trend analysis. These updates aim to improve the accuracy and utility of the insights provided to users.
TrendsAI Model A0 (Released 09/10/2024)
Model A0 improves upon previous versions by directly optimizing for potential returns or Sharpe ratio within a hypothetical trading strategy, rather than solely predicting uptrends or downtrends. Key indicators used include:
- TrendMeter Indicator: This analyzes EMA (Exponential Moving Average) crossovers for three periods. If the most recent EMA is above the short, medium, and long-term EMAs, it indicates a potential bullish trend.
- SuperTrend Indicator: It identifies potential bullish conditions using a multiple of the Average True Range (ATR) over time.
Parameters for these indicators are optimized using Walk Forward Optimization (WFO), tuning them on historical data (e.g., 2015-2021) and testing on later periods (2022-present) to enhance reliability. Model A1, which includes backtested results, has shown periods of outperformance compared to a Buy & Hold strategy.
TrendsAI V3.0 (Released 07/26/2024)
In V3.0, all previous predictions from V2 were updated using the V3 model. This version defined a bull market as the price in the future 30 trading days being higher than the price in the previous 30 days. By establishing an exact definition, an AI model was built to learn the importance (weight) of each technical indicator in predicting this bull market definition. The technical indicators used include:
- Percent change from last close
- Percent change from MA 7 close
- Percent change from MA 14 close
- MACD
- EMA Crossover
Results indicated that the model provided more refined insights than using technical indicators alone. This version was initially released for a sample of 489 tickers in the S&P 500 index, with plans for expansion.
TrendsAI V2.0 (Released 07/17/2024)
V2.0 employed a Hidden Markov Model to learn bull or bear market characteristics based on historical returns. Predictions were backtested against common strategies like Buy & Hold and Crossover. Backtesting results showed periods of outperformance compared to a Buy & Hold strategy.
While the results were positive, their repeatability across a large number of tickers was a challenge. The opaque nature of how the model learned from data also required continuous monitoring to ensure the results remain effective over time.
TrendsAI V1.0 (Released 06/01/2024)
The initial V1.0 computed 10 different technical indicators daily, deriving a score from 1 to 10 based on indicator activity. A higher score suggests a stronger bullish trend, and vice versa. The 10 indicators included:
- Band 10: Breakout/Breakdown – Identifies bullish or bearish breakouts based on recent highs and lows.
- Band 9: Price vs. Moving Average – Compares today’s average price to the 23-period EMA.
- Band 8: Candle Color Dominance – Evaluates the prevalence of bullish or bearish candles over the past 15 days.
- Band 7: EMA of Mean Price – Compares the EMA of the mean price to the previous day’s EMA.
- Band 6: Mean Price vs. EMA – Assesses whether the mean price is above or below the 23-period EMA.
- Band 5: Mansfield Relative Strength – Measures the stock’s performance relative to a benchmark.
- Band 4: Short-term vs. Long-term MA – Uses the MACD Histogram to indicate momentum changes.
- Band 3: Momentum Indicator – Analyzes bullish or bearish momentum using the MACD Histogram.
- Band 2: Volume and Price Change – Sums volume differences to gauge market sentiment.
- Band 1: RSI / Support and Resistance – Evaluates the RSI relative to overbought and oversold thresholds.
Potential improvements for this method included refining it by assigning appropriate importance to each indicator based on historical results.
