Visualize the Ordered Trading Landscape for Any Financial Entity

Tradescapes Standard Edition offers the core analysis options for traders in financial markets who employ indicators, strategies, and algorithmic signaling for entering and exiting positions. There are five applets in this edition:

Asymmetric Tradescapes
Progressive Tradescapes
Intraday Tradescapes
Trading Signal Analysis

Each of the five applets furnished in this edition are designed to solve specific problems in entity selection and signal design that are intrinsic to any signaling system. The intention is to answer key analysis and design issues swiftly, effectively, and with confidence.

Tradescapes’ state of the art 3D graphics display the expected reward-pain (RRt) from accurate signalers functioning at every combination of time horizon and lag. You can detect all sweet spots in terms of an absolute measure of information content and lag and easily compare your real-world trading signals in terms of time horizon, lag and performance. Analyses can be run using any bar density and any amount of data history to map the ordered trading landscape, long or short. A tradescape surface is a compact visualization containing the output from 700 different backtests.

Tradescapes – Favorable Entities and Time Horizon

The entity you trade is often as important as how you trade it. The prices of certain financial instruments move in a more orderly fashion than others. Those entities will have a greater tolerance for lag or latency in the signaling process. Whether or not the underlying entity has a significant long term trend, the trader definitely wants the equity curve derived from that trading to have a strong, persistent, and smooth growth curve with minimal drawdowns.

In seconds, Tradescapes make clear which entities, when accurately traded for the order inherent in the price movements, are likely to be signaled effectively for a given reward-to-pain across time. However traders define reward, and in whatever manner they define pain, one wants more reward than pain. Tradescapes are designed around this particular reality of trading.

This tradescape panel includes ETFs for some of major world indices and for gold, and illustrates what would be realized in reward-pain for trading these instruments long across the last eight years using EOD data. In this one view, you are visualizing over 10,000 backtests in the 15 trading landscapes. Certain entities offer a very favorable response to ordered signaling; others fare poorly. There are those that are quite lag-tolerant at a broad zone of time horizon, others that are only so in a much narrower range, and there is one that is very difficult to signal for more reward than pain no matter what time horizon you use or how nimble or responsive your signaling algorithm.

The graphs in Tradescapes were authored by the inventor of the TableCurve 3D scientific software package who completely re-designed them for visualizing trading landscapes. In the x direction, you see how fast or slow you must signal and in the y direction you see how nimble your signaler must be in terms of lag. The colors used in the various gradients were designed to help you make a swift and meaningful tradability assessment.

An individual tradescape maps the entire trading response surface using an ideal signaling algorithm drawn from the EM (expectation modeling) science. A tradescape presents the ideal trading landscape for the ordered component of price movements.

When the history used is sufficient, a clear picture emerges as to the time horizon that should be used for signaling that entity. Some entities must trade very quickly, with a fast time horizon, so as to effectively capture the ordered movements in prices. Others must trade more slowly. Many will have multiple “sweet spots” and “dead zones” where trading will be especially effective or particularly poor.

By visual inspection of a tradescape, you can know in seconds the time horizon most wisely used for your signaling. Once that determination is made, the lag the signaler will need to achieve at full accuracy in order to realize a given reward-to-pain ratio is also immediately evident.

Asymmetric Tradescapes – Answering Signaling Asymmetry

Entry and exit points will tend to have a different mix or at least a different sequencing of the human dynamics governing price movements. The nature of the price turns in one direction may be very different than those in the other direction. One of the first determinations a trader should make for a given entity is whether or not asymmetric signaling is needed.

You can think of asymmetry as varying from the fast to enter-slow to exit strategy to that of the slow to enter-fast to exit approach. As with any optimization where there is a different parameter for the entry as opposed to the exit, the asymmetry of a signaler adds a good measure of complexity. A great deal of time can be spent in such multi-parameter optimizations, and they may be fraught with issues of over-fitting.

This second applet in the standard edition, asymmetric tradescapes, generates a panel of tradescapes where the information content used for entries and that used for exits is varied in different asymmetry ratios. With an asymmetric tradescape panel, you look at the entire trading landscape at each different asymmetry and you look for a decided advantage over the symmetric case. With a little experience, you will know whether or not an asymmetric signaler is going to be of value and you will have a good idea as to the asymmetry needed in your signaler.

If you perform any form of parameter optimization where different entry and exit parameters are evaluated, you will almost inevitably optimize to an asymmetric signaler. Asymmetric trendscapes, where you see the entire trading landscape for various signal asymmetries, will confirm a true asymmetry. The above asymmetric panel is for Intel. Here the center panel, the symmetric case, appears about optimal.

Progressive Tradescapes – Robustness Across Time

One of the most critical questions that arises in any signal design is the stability in performance or robustness across time. Before any signal algorithm design is even begun, one can answer this crucial question using the third applet in the standard edition. It generates a time-sequence of tradescapes known as Progressive Tradescapes.

Experienced traders ask the hard questions of any entity-signaler pair. How well behaved is it across the different market states? If one were to select the target time horizon from an aggregate eight year EOD tradescape, for example, what would four different two-year periods look like?

With respect to performance, one would expect a significant variation across the different time segments as the overall markets move through their different cycles. Still, the trader wants to see robustness in that time horizon across all of these varied states. In a progressive tradescape, a trader wants to see a higher reward than pain, or at least a positive return, at a specific target time horizon in each of the time panels. In the gold ETF above, we look at the 2-yr panels across eight years of long trading using EOD data. The art here is to select that time horizon that is most likely to persist in terms of performance across time. Here a time horizon value of 10-12 would have good robustness, generating more return than pain in each of the 2-yr periods at reasonable lag fractions.

Intraday Tradescapes – Optimal Data Density and Time Horizon

The standard edition includes a fourth applet for generating intraday tradescapes. They are a convenience that allows a panel of different bar densities to be automatically constructed and analyzed using just one intraday input data stream. By using a reduction algorithm with a single input data stream, a fixed period is represented for each of the bar densities generated. An asymmetry may optionally be specified.

The purpose of an intraday tradescape is to identify the data density and time horizon for best trading the measure of order that can be realized from intraday price movements. Here we see the gold mini as very favorable with 15 and 30 minute sampling.

Trading Signal Analysis – Leading Edge

This fifth standard edition procedure evaluates one’s real-world trading signals against the backdrop of an entity’s tradescape. This is the signal design procedure for the standard edition.

Your real-world trading signals will be plotted atop the tradescape at their respective estimated time horizon and lag fractions. A brief summary of the signal analysis for each trading system is shown when moving the mouse over the special point representing that particular trading signal.

The full signal analysis, including the equity curve, is shown when clicking on the point representing that particular trading signal. In terms of the performance and signal evaluations, you are presented state-of-the-art leading edge analyses that form the core of the tradescapes technology.

New Technology for Next Generation Traders

Nearly everything we have built into Tradescapes you will find nowhere else. Tradescapes required five years to develop, and a great many aspects had to be revised along the way. Tradescapes breaks new ground as an entirely new technology to assess entities and signals for financial trading.