The Adaptive Trend Matrix offers an advanced machine learning (ML) filter, inspired by pattern-recognition AI, to help traders separate high-quality signals from noise. This sophisticated filter augments your technical strategy with real-world learning—enhancing your edge in ever-changing markets.
How the ML Filter Works
Historical Pattern Recognition:
The system uses machine learning model distance to measure the “closeness” between current market conditions (based on multiple technical features) and historical patterns from recent data.
Nearest Neighbors Algorithm:
By comparing the most recent data to a large set of prior bars, the ML filter identifies a group of “nearest neighbors”—historical periods that most closely match current price action.
The filter assesses how prices typically behaved after those similar historical conditions.
Dual Outputs:
Prediction: Indicates if the current market context is more likely to produce a bullish (upward) or bearish (downward) outcome, based on what happened after similar past setups.
Confidence: Represents how consistently those nearest neighbors agree with the predicted direction—expressed as a percentage.
Signal Filtering with ML
You can use the ML filter to automatically screen trading signals and reduce false positives:
Normal ML Filter:
A signal is considered valid only if the ML prediction exceeds your chosen threshold and the confidence among historical neighbors is above 30%.
This balances signal quality and quantity, blocking most low-confidence setups.
Strong ML Filter:
For even higher selectivity, enable the “Strong” filter. This mode raises the prediction threshold and requires above 50% confidence from nearest neighbors, further reducing risk of noisy or ambiguous trades.
Pro Tip for Different Trading Styles
Scalpers or High-Frequency Traders:
If you need more signals or prefer a faster-paced strategy, drop the ML filter’s confidence threshold or disable the ML layer altogether to see more raw opportunities.
Swing and Position Traders:
Leave the ML filter enabled with stricter thresholds for higher-probability, high-conviction signals.Summary:The AI-driven ML filter automatically analyzes and scores every trade setup by comparing it to thousands of similar real-world scenarios in your chosen market—boosting quality and tailoring the Adaptive Trend Matrix to your risk appetite and time horizon.
