About ARM Technology

What is "ARM"?

ARM stands for Adaptive Reasoning Model. In the Nirvana Club, we have taken ARM several levels above OmniTrader through the use of applied Artificial Intelligence.

  • Overview
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  • ARM 5

New A.I. Technology for 2017 and Beyond!

In addition to the Neural Network another powerful tool developed in the Nirvana Club is our Genetic Algorithm.​

Neural Networks combines inputs in a "fluid" way, a Genetic Algorithm is based on RULES.  A Rule is a collection of factors (inputs) which indicate a strong profit when present together.

As Traders, we would like to evaluate  50, 100 or even 200 different indicators to "figure out" which ones combine to create a profitable outcome.  That's a VERY large problem and it's what the G.A. excels at!

The example to the right is an actual Rule in our GA Funds Strategy.  This rule was 81% Accurate with 2.84% Profit per Trade with 148 occurrences over historical data.  The Knowledge Base was created over about 15 hours, and has a total of 3,500 rules.

Finding Profitable Rules in MILLIONS of bars of data

You may be wondering how the Genetic Algorithm can get such great results.  The picture to the right represents 6 inputs (real problems can have hundreds.)  Our first step is to measure all inputs across all our data.  Inputs to the GA can be:

  • Technical Indicators
  • True/False Comparison
  • System Signals

Multiple inputs make up a "chromosome".  In the picture to the right, each chromosome has 6 inputs each.  Each input will have a starting value, like "RSI(14) > 30 = True".  Some inputs are set as "X" for Don't Care, which means their value is not used in that chromosome.

Each chromosome is then tested for profitability across ALL the data, recording average accuracy (“Hit Rate”), average profit per trade (“PPT”), and other statistics for each“match”.

Now we start a “genetic” process of crossover and mutation to hopefully find better results,and the process is repeated many times.Finally, the best Rules are saved to the Knowledge Base.

Over 80% Accurate!

All Nirvana Club Members have access to the ARM5 Strategies listed on our web site, including the one shown here, called "GA Funds".  This Strategy , developed for trading Exchange Traded Funds (ETFs), is showing 80% accuracy in out-of-sample data.  This is just one of several breakthrough Strategies developed with the G.A. in 2016.

A New Level of Profitablity

In 2016, we dramatically improved our Genetic Algorithm using techniques described onthe next page.

These advances have made it possible for us to build several outstanding new Strategies that shatter prior records, including GA Stocks RTM, shown on the right.

This Strategy has dramatically out-performed the market for the past 13 years, making an incredible 30% per year on average. Strategies this powerful are not available anywhere else.

And it gets better...

This is just one of the Strategies we released with the latest version of ARM5. I personally applied this technology to create an improved Secret Sauce Strategy as well as an ARM5 Liquid Stocks Strategy,the first one I’ve seen showing 85% profitability!

Achieving Unprecedented Accuracy & Profits

​Creating a Mechanical Strategy that is 70% accurate is not easy,unless you have ARM5!

​I personally trained a Knowledge Base, using the G.A., on 20very liquid stocks and was able to get out-of-sample, forward test accuracy of 85%. Then, I applied this Knowledge Base to a new list of 300 stocks, which shows nearly 75% accuracy on this expanded list. A Portfolio Simulation and recent trade list is shown to the right.

Several key improvements were developed and tested to improve the G.A. in 2016, including:​

  • Incremental Training
  • Uniqueness of Rules
  • Technical Filters
  • Group-Based G.A.'s
  • Boolean Imputs
  • And more. . .​

Each of these advancements is described in detail on the Nirvana Club Web site.The most significant were Incremental Training and the use of Filters when training a Knowledge Base with the GA.

NEW Incremental Training.  This chart illustrates the Incremental process.  Multiple Knowledge Bases are created so all trades are "out of sample".

Incremental Training: All Trades are in "Out of Sample Data"!

When Incremental Training is applied, the program uses a prior Training Period to create a set of rules for the NEXT TRADING Period.  In this way, all trades are generated in "Out of Sample" data.  So every trade you see i sone you would have seen on the right edge.

By restricting training to only occur in Trending Zones, the resulting Knowledge Base will be much more robust – finding trading opportunities when this specific condition exists.

Filters: Creating More Accurate Knowledge Bases

Another important feature we added to the G.A. in 2016 is the concept of Filters, like the Trend Filter shown here. Rules are only be generated when the Trending Filter is True, resulting in a much better and more accurate rule set. The Filter concept was used in the creation of the GA Stocks RTM Strategy.

ARM5 is the result of hundreds of steady improvements made to our A.I. technology since the Nirvana Club was founded in 1996. There is no question about it, The Club has the best and most profitable Artificial Intelligence technology in the world, making a Nirvana Club Membership the best investment you can make.