AI Trend Navigator [K-Neighbor]

7 באוג׳ 2023

█ Overview
In the evolving landscape of trading and investment, the demand for sophisticated and reliable tools is ever-growing. The AI Trend Navigator [K-Neighbor] is an indicator designed to meet this demand, providing valuable insights into market trends and potential future price movements. The AI Trend Navigator [K-Neighbor] indicator is designed to predict market trends using the k-Nearest Neighbors (KNN) classifier.

By intelligently analyzing recent price actions and emphasizing similar values, it helps traders to navigate complex market conditions with confidence. It provides an advanced way to analyze trends, offering potentially more accurate predictions compared to simpler trend-following methods.




█ Calculations

• KNN Moving Average Calculation: The core of the algorithm is a KNN Moving Average that computes the mean of the 'k' closest values to a target within a specified window size. It does this by iterating through the window, calculating the absolute differences between the target and each value, and then finding the mean of the closest values. The target and value are selected based on user preferences (e.g., using the VWAP or Volatility as a target).
  
  
• KNN Classifier Function: This function applies the k-nearest neighbor algorithm to classify the price action into positive, negative, or neutral trends. It looks at the nearest 'k' bars, calculates the Euclidean distance between them, and categorizes them based on the relative movement. It then returns the prediction based on the highest count of positive, negative, or neutral categories.
  

█ How to use
Traders can use this indicator to identify potential trend directions in different markets.

Spotting Trends: Traders can use the KNN Moving Average to identify the underlying trend of an asset. By focusing on the k closest values, this component of the indicator offers a clearer view of the trend direction, filtering out market noise.



Trend Confirmation: The KNN Classifier component can confirm existing trends by predicting the future price direction. By aligning predictions with current trends, traders can gain more confidence in their trading decisions.




█ Settings

PriceValue: This determines the type of price input used for distance calculation in the KNN algorithm.

• hl2: Uses the average of the high and low prices.
  
• VWAP: Uses the Volume Weighted Average Price.
  
• VWAP: Uses the Volume Weighted Average Price.
  
• Effect: Changing this input will modify the reference values used in the KNN classification, potentially altering the predictions.
  

TargetValue: This sets the target variable that the KNN classification will attempt to predict.

• Price Action: Uses the moving average of the closing price.
  
• VWAP: Uses the Volume Weighted Average Price.
  
• Volatility: Uses the Average True Range (ATR).
  
• Effect: Selecting different targets will affect what the KNN is trying to predict, altering the nature and intent of the predictions.
  

Number of Closest Values: Defines how many closest values will be considered when calculating the mean for the KNN Moving Average.

• Effect: Increasing this value makes the algorithm consider more nearest neighbors, smoothing the indicator and potentially making it less reactive. Decreasing this value may make the indicator more sensitive but possibly more prone to noise.
  

Neighbors: This sets the number of neighbors that will be considered for the KNN Classifier part of the algorithm.

• Effect: Adjusting the number of neighbors affects the sensitivity and smoothness of the KNN classifier.
  

Smoothing Period: Defines the smoothing period for the moving average used in the KNN classifier.

• Effect: Increasing this value would make the KNN Moving Average smoother, potentially reducing noise. Decreasing it would make the indicator more reactive but possibly more prone to false signals.
  

█ What is K-Nearest Neighbors (K-NN) algorithm?
At its core, the K-NN algorithm recognizes patterns within market data and analyzes the relationships and similarities between data points. By considering the 'K' most similar instances (or neighbors) within a dataset, it predicts future price movements based on historical trends. The K-Nearest Neighbors (K-NN) algorithm is a type of instance-based or non-generalizing learning. While K-NN is considered a relatively simple machine-learning technique, it falls under the AI umbrella.

We can classify the K-Nearest Neighbors (K-NN) algorithm as a form of artificial intelligence (AI), and here's why:

• Machine Learning Component: K-NN is a type of machine learning algorithm, and machine learning is a subset of AI. Machine learning is about building algorithms that allow computers to learn from and make predictions or decisions based on data. Since K-NN falls under this category, it is aligned with the principles of AI.
  
  
• Instance-Based Learning: K-NN is an instance-based learning algorithm. This means that it makes decisions based on the entire training dataset rather than deriving a discriminative function from the dataset. It looks at the 'K' most similar instances (neighbors) when making a prediction, hence adapting to new information if the dataset changes. This adaptability is a hallmark of intelligent systems.
  
  
• Pattern Recognition: The core of K-NN's functionality is recognizing patterns within data. It identifies relationships and similarities between data points, something akin to human pattern recognition, a key aspect of intelligence.
  
  
• Classification and Regression: K-NN can be used for both classification and regression tasks, two fundamental problems in machine learning and AI. The indicator code is used for trend classification, a predictive task that aligns with the goals of AI.
  
  
• Simplicity Doesn't Exclude AI: While K-NN is often considered a simpler algorithm compared to deep learning models, simplicity does not exclude something from being AI. Many AI systems are built on simple rules and can be combined or scaled to create complex behavior.
  
  
• No Explicit Model Building: Unlike traditional statistical methods, K-NN does not build an explicit model during training. Instead, it waits until a prediction is required and then looks at the 'K' nearest neighbors from the training data to make that prediction. This lazy learning approach is another aspect of machine learning, part of the broader AI field.
  

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Disclaimer

The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.

All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

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11 באוג׳ 2023

הערות שחרור

Improvements!

• Alerts Added
  

11 באוג׳ 2023

הערות שחרור

• Tooltips Added
  

30 באוג׳ 2023

הערות שחרור

Performance improvements!