Case-Based Analysis: The Key is the Data

摘要

Analog, or case-based, analysis is one of the more powerful trading techniques. However, it also is one of the more difficult to systematize. Here, we expand on our previous discussion of case-based reasoning and cover the steps to computerizing this strategy. In "Making the case for the trade" (October 2003), we discussed the basic ideas of case-based reasoning. We covered the notion of using analogs to make trading decisions and moved on into how case-based reasoning can be used to implement analog trading patterns. The concept of case-based reasoning for trading application is simple: Look at the current record and find similar records in the past; then, observe what happened during some period after these past records and use the observations to forecast what will happen in the future.