Regularization by Chris Satchwell, Ph.D.
In the lexicon of technical analysis, terms such as
moving averages and least-squares regressions
are commonly understood. But what about regularization?
Despite their potential, regularization
techniques are poorly understood and little used.
Ultimately, indicators exist to aid trading
decisions. Most indicators are
used in relation to price-related
tasks, and there is a crucial and
(usually) underresearched step involved
in interpreting their values to obtain trading
decisions. Such a step might be the crossover of
two moving averages, or an indicator penetrating
a threshold value.