Hybrid construction of a mechanical timing system from smoothed signals

One inspectable procedure

A mechanical-trading-system can be assembled so that entry, exit, and no-trade outcomes are produced by one inspectable procedure rather than by an unexplained score. Hybrid construction uses a trained network only to rank indicator subsets. Those subsets are then rewritten as inspectable rules rather than left as an opaque score.

Keep only inputs that move the decision

Candidate rule inputs can be screened with an input-variance probe. An indicator subset is varied together within a plus-or-minus 10 percent band. The subset is retained only when the output movement is large enough to justify encoding.

Turn retained subsets into productions

The construction can convert each retained indicator subset into one production rule. The rule base is sized to the number of subsets judged important, reported in the source as 271 rules. A rule-based-entry can be written so that a buy decision is added only when every listed precondition is true. Those preconditions can include a regime gate: a minimum confidence that the market is currently trending.

Smoothing as a comparable baseline

Exponential-smoothing enters the procedure as a comparable baseline. Yesterday's index at or below yesterday's exponential moving average, together with today's index strictly above today's average, can form the arithmetic core of a buy rule.

Weight rules and allow abstention

Each encoded rule can carry a certainty factor that scales how much that rule updates the buy or sell attribute. A weakly weighted rule is intended to be corroborated by other activated rules. A local selection-cost coefficient can be attached to a rule so that rules with equal certainty do not compete equally if one is assigned a higher conceptual cost of use. The same procedure can include an explicit abstention path. When inputs are judged non-meaningful or chaotic, the system is designed to withhold a signal rather than force a trade.