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ARM5 Sets New Performance Records

​“After many months of work, applying and enhancing our Artificial Intelligence technology, or AI, ARM5 (Adaptive Reasoning Model 5) has finally been released!

​This incredible new platform has already made it possible for us to build several outstanding new Strategies, including the one shown on this page. Using the powerful new features in ARM5, this Strategy has dramatically outperformed the market for the past 13 years, making an incredible 30% per year.

Adaptive Reasoning Model Equity Curves

​It is important to note that ARM5 wasn’t built overnight. It’s the result of years of steady improvements to our A.I. technology in the Nirvana Club.

What is Artificial Intelligence?

Artificial Intelligence, or “A.I.” is a class of computer algorithms that predict a Goal using specific Inputs. In trading, the Inputs are chart measurements and the Goal is high profits with low drawdowns.

A.I. has been used to improve investment returns by hedge funds and proprietary trading shops for years. But before the Nirvana Club this kind of technology had never been available to individual traders.

Our A.I. components are available as “blocks”, making it easy for anyone to add one to a Strategy through a “drag and drop” process.

We have 3 different A.I. Strategy blocks: a Neural Network, a Consensus Block, and a Genetic Algorithm. Each operates a little differently and is best suited to solving different kinds of trading problems. But all work essentially the same way...

The Power of the Adaptive Reasoning Model

20 Years in the Making

ARM stands for “Adaptive Reasoning Model” – a term we used for the process of Back-Testing Strategies and “Voting” individual Strategy Signals to achieve higher performance – a process we first released in OmniTrader in 1993.

However, by 1995, we realized in order to get REALLY GOOD Signals, we would have to use Artificial Intelligence. Why? Because finding profitable setups is difficult, unless you can try millions of combinations. The Nirvana Club was founded in 1996 to pursue this goal. (See About The Nirvana Club).

How ARM Works

1. Start with a Good Strategy

First, we start with a good Strategy. We have many great Strategies that have been developed for OmniTrader over the years, including T3, NSP-41, VBX-3 and many more. Our A.I. can improve almost any Strategy.

2. Define Some Inputs

INPUTS are technical Factors and Clues that we think could be predictive. Examples include:

  • Trading Systems, like the Moving Average Crossover System
  • Classic Technical Indicators, like MACD, RSI, Stochastics, ect.
  • Other Measurements, such as "Distance from a Moving Average" or a True/False value like"Close above Yesterday's Close."
Adaptive Reasoning Model Accuracy

Adaptive Reasoning Model Strategy Builder
Adaptive Reasoning Model Training

This Strategy has many good Signals, but can be improved. Some of the measurements we define to evaluate the Signals are indicators. We want to let the A.I. Component figure out how to use these measurements to identify profitable Signals in the future.

3. Add an A.I. Component

In OmniTrader, we add an A.I. Component by “dragging and dropping” the block into a Strategy. Next, we add the Inputs.

To the right is a Neural Network component showing the Inputs and Training Graph on the main interface. We add as many Inputs as we think might provide valuable information to the process. We have already done this – Users can just use the result for trading.

4. Train the Component

In the case of a Neural Network, the Inputs are combined using “weights” at the various layers. The algorithm constantly adjusts the weights until the Output (which in our case, is usually Profit) is as large as it can be. Once trained, the NN is ready to identify good Signals in the future.

Adaptive Reasoning Model Neural Network

5. Run the Strategy

Once the A.I. block has been trained on the data, we can run the Strategy on the securities we trained it on to generate Signals each day. We can also apply it to different securities as long as they have similar technical characteristics.

Adaptive Reasoning Model Accuracy

How ARM Works

We typically see profits improve by 20% but in some cases profit per trade has increased by over 100% and accuracy has reached 80%.

ARM5 is the fifth and latest version of our Adaptive Reasoning Model technology. Discover how ARM5 has improved on our prior successes in the ARM5 section.

Adaptive Reasoning Module Building Blocks
Adaptive Reasoning Model Signals