For Immediate Release


Is the Market a Computer?

August 21, 2007 --  Most traders today use computers. Many hedge funds are fully directed by computer programs. Long time trader and market researcher Duane Archer believes the market itself is a computer.

Instead of using complex formulas to predict prices, Archer contends prices of stocks, commodities and currencies often behave according to a relatively simple algorithm. Archer believes the markets are themselves computational entities, or computers, using buy and sell orders as input and generating market prices as output.
Archer’s proprietary Trend Machine software has been in development since 1991. It uses a modeling technique, cellular automata (‘CA’), to create a virtual market computer (‘VMC’) to find the  correct algorithms for specific markets.

“CA has been used for a number of problems too complex to be analyzed with conventional ‘linear’ methods. The markets are an example of a complex system. Simple input creates complex output. You just need to know the correct algorithm to convert order input to price output.”

The markets have numerous short periods of extremely high predictability. There are short ‘bursts’ when the odds go over 90% and very close to 100%.

The statistical and linear methods currently in vogue can only measure the trades made in the past and already ‘in the market.’ Cellular automata algorithms appear able to also measure future trades; at what price levels and time frames they will occur. “A market’s algorithm creates a price-time sieve through which all buy and sell orders past, present and future must pass.”

Archer has had little success interesting any of the major players in the Trend Machine. He takes that as a good omen. “Although professional risk takers they are extremely in-the-box thinkers. If they don’t understand it, it must not be worth much. If it doesn’t fit their narrow statistical evaluation criteria, they won’t touch it.”

The back-test results in the Forex market have been excellent and Archer intends to go real-time soon with a Trend Machine Forex hedge fund. He also uses a proprietary Market Environment (‘ME’) program for testing as conventional methods are generally curve-fit to only a few specific market profiles.

He is no newcomer to leading-edge market research. His expert system, Jonathan’s Wave, generated 48% per annum in the commodities market from 1986-1989 according to Managed Account Reports. The Trend Machine has much more potential, according to his research.

Archer has authored or co-authored four books on Forex trading, including the popular Getting Started in Currency Trading and the upcoming Getting Started in Forex Trading Strategies. His website, www.fxpraxis.com offers original research in market forecasting.

A position paper on the Trend Machine is available on his website, www.fxpraxis.com

Mr. Archer may be contacted at This email address is being protected from spam bots, you need Javascript enabled to view it

Duane Archer
This email address is being protected from spam bots, you need Javascript enabled to view it
FxPraxis
www.FxPraxis.com
303-274-0515

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