C++ Neural Networks and Fuzzy Logic: Preface

Domain Expertise

So far we’ve talked about the target and the timeframe. Now one other important aspect of model building is

knowledge of the domain. If you want to create an effective predictive model of the weather, then you need to

know or be able to guess about the factors that influence weather. The same holds true for the stock market or

other financial market. In order to create a real tradable Treasury bond trading system, you need to have a

good idea of what really drives the market and works— i.e., talk to a Tbond trader and encapsulate his domain

expertise!

Gather the Data

Once you know the factors that influence the target output, you can gather raw data. If you are predicting the

S&P 500, then you may consider Treasury yields, 3−month T−bill yields, and earnings as some of the factors.

Once you have the data, you can do scatter plots to see if there is some correlation between the input and the

target output. If you are not satisfied with the plot, you may consider a different input in its place.

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C++ Neural Networks and Fuzzy Logic:Preface

The Target and the Timeframe

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