 Hey everybody, this is Brian and in this video, we're talking about Magic8Ball and we're talking about how accurate is it. If you don't know Magic8Ball, it is the stock market prediction engine. This video is going to be admittedly a little bit messy. I want to do the whole thing in one shot with zero editing just in complete transparency to show you I'm not hiding anything. All right, so Magic8Ball, the stock market prediction engine, how accurate is it? Let's scroll down. Predictions of this thing kicks out for multiple underlines. We're going to micro-focus on SPX because that's what it was designed to actually calculate on. I've added in a few others. Each one is a little bit different. You can see it's based off the market trend and what it looks like, but for the point of this conversation, we're just talking about SPX. So let's go into SPX. You can see it kicks out some data here. We have our prediction. I've added in the market metrics and it has some nodes. These are volume nodes and then a forecast based off the volume in the future. And then the trades. And this is something that has been the point of contention with people is trades. I've seen people get into all-out verbal fistfights over this to the point they're using all caps and they refuse to talk to each other ever again. This was never designed to be a trading algorithm or trading platform. I'm trying to build an indicator that looks for the accuracy at end of day. And that's why this chart exists. I'm trying to find where is this price going to go? So for example, today is December 8th, 2022. It is 1121 in the morning. At this point in time, SPX is currently here. The prediction line, this blue line, thank you, Dr. Russell for telling me to put that in there, shows the history of the prediction throughout the day and you see it's actually changing as the market changes. It's gone up to the 3990. I suspect it'll jump back up. But anyways, time will tell it's now at 3970, but the price is dropped down here. So we have our long-term predicted closing short-term, these lines here, red, blue, and green. The red line is below the green short-term predictions. So we actually think this will jump up. Then we have the volume view down here. We have price here. We have the primary node and the secondary node by bright red and dark red. And then this, I don't know, color's peach colored box. This is the volume area of that node. So the price is actually well below node one and node two. So this thing should pull up at least to node one. Node two may have some pulling effect and pull it up to our black center line, but I suspect it's going to snap up here. And if we go back into the prediction, that's actually what it's saying. It's saying our short-term is 361, our predicted close is 3970. So markets can and do change. Right now we have two nodes, 3980 and 4000, and their volume is almost even here. But you see that the rate of change with node one is negative and the rate of change with 39, or I'm sorry, with node one is positive, node two is negative. Again, no editing, sorry if that's confusing, meaning 3980 is growing and 4000 is shrinking. So the price is going to start dropping down, and we actually see that on the chart. I suspect my guess is that this will flip and 4k will become the dominant node again, but time will tell. How do you trade this though? That's the million dollar question, and how do we get to the accuracy? All right, we have butterflies, iron condors and verticals. Previous versions of this did not store anything into a file or database because I was more focused on getting the accuracy down. People demanded to know accuracy. So every single day, this thing kicks out a trade report specifically for SPX, and let's just crack that open. I'm not a spreadsheet junkie, so I'm going to make mistakes, no editing. All right, the columns name, premium probability, kind of ignore that predicted close. Those are the key indicators right there. What did we predict? Where did it close? Did it profit? Did it expire and the actual trade? So profited, this takes a little bit of explanation, I'll make it super short. I am simply saying at any point in time, did the price land within the break even of the trade? I don't care if it was 10 cents or $10 million profit, was it profitable at some level? So this is a column I don't really take into account. This is just people wanted to see, did it profit or not? I focus solely on column H, and I'm going to highlight this in yellow, expired. I'm chasing full expiration or full profit from these trades. So this is what we're talking about, accuracy for full profit. You'll also notice there's some trades in here that you don't see in the actual prediction. For example, broken butterflies, Sniper and JOIF. If you don't know what these are, this is the Jim Olsen iron fly as a massive iron fly. You get a huge amount of premium for entering, but it's highly unstable, at least in this market for me. Sniper is a very narrow butterfly, and it has not been profitable. And broken butterfly is a directional butterfly, Ariane with axe options. She does great videos on how to do this. I'm horrible at it, so I pulled it out of the system. I may read it. It's in the log, but it's not customer facing. So let's go ahead and we need to filter this a little bit. So I'm going to standard filters, and I want to say, did it expire? Yes. So we're only showing, did it expire? And there are, let me scroll down here, 800 some odd trades here, so bear with me. So I'm just going to highlight all those. And then I'm going to say, if it's not empty, actually, let's flip it over to false. I do this every day, I do it slightly differently. I call it a color map where I zoom way out, and I just want to see an overall map of what this looked like. So expired is now false. We're going to put these as bright red, you know, danger. And then let's go to data, standard filter, and then not empty. And we can see now that the system has flaws. I never said it was perfect. And you'll notice over and over again, the ones that I don't have customer facing, the JOIF and Sniper, these are the ones that are having problems. And you can kind of scroll through these, you know, JOIF, Sniper. And what I like to do is kind of zoom out and just get a color map. You see bright swatches of red. So let's clean this up a little bit here. So I'm going to go up to the top. More filters, standard filter. So we want the name to be either the butterfly, name equals Iron Condor, or the name equals, what am I missing here, vertical. So only what we're showing to people in the Discord, the butterfly, the Iron Condor, and the vertical. Let's show that here. Butterfly, Iron Condor, vertical. There's nothing else in here at the moment. Now this gives us a more accurate representation. And what I like to do is zoom out. And I call this a color map. So it's very easy to see what's hitting and what's missing. And you can see a lot of things hit early morning. Then we have a cluster of things that failed. And some things that failed. The vast majority of these are green, but we can start seeing patterns like right here. Let's just zoom in, see what's going on. Ah, the butterfly had problems around that time frame. And that to me makes sense because I'm horrible at butterflies. I am the world's worst option trader, which is why I started developing Magic Ape Ball because none of this makes sense to me. And I just wanna be able to copy and paste a trade into thinkorswim and just make money. But you see some butterflies are successful like this guy here versus these guys. So some trades work at certain times in market conditions. So here's some verticals that failed along with some butterflies. Iron condors look like they are rock solid throughout the day. Scroll up, butterflies again failing. Makes sense to me because I struggle with butterflies. I've got one on right now at the 4,000 node December 8th, 2022. And I'm expecting that I will lose my $50. Now if it hits, hey, I made 400, but that's how that works. So this is a color map. I tend to look at it every day. I'm trying to find flaws and patterns in the system so I can improve it. And I wanna go back and look at market conditions on why the butterfly failed. I think I have it sorted out. I just gotta write the code for it. So if you want hard numbers, this is where I have to do what I call the phone a friend option. I put this log out into the chat every single day. And Meeks, I hope I say your handle here right. He crunched the numbers for the last two days. So big props out to him. He says, I think if you took all the vertical trades, so he's just focused on SPX verticals for 12, 7, to expiration, again, that word expiration, meaning full profit or full loss. There were 140 trades for a total collateral of $51,000. There were 119 winners at positive 15,000, 21 losers at negative 7,000. That's a 16.58 return on capital. That was yesterday. The day before 12, 6, market was completely different. Remember the market changes from day to day. Verticals only, SPX to expiration. There were 80 trades, 61 winners at positive 8,019. Losers at 6,000 negative or a 6.59 return on capital. I may need to pick your brain on how you calculated that because I'm actually struggling with the math behind here to really improve these things, especially butterflies. If I can get butterflies more accurate, I think the system's accuracy will go way up. I mean, almost every cluster of failures has butterfly in it. I suspect it's because my butterflies are just simply too narrow. The problem is I don't want to spend a lot of money on a butterfly to get into it. So in the past, what I've kind of experimented with is butterflies are only done at certain times of the day. I've noticed this pattern, let me zoom out, quite often where you'll get clusters around mid-morning, clusters around lunchtime, clusters around mid-afternoon where butterflies fail hard. But then late afternoon, for whatever reason, it started failing again. Usually that's just bright green all the way through. So I hope that answers your question on how accurate is it? Again, this is a work in progress. It was never meant to be an automatic trading algorithm. It's meant to be an indicator to help you, the trader, the investor, figure out. So if you're gonna trade this, yes, there are flaws. You, the investor, have to use what I call common sense, something that I often lack. And just look at the market conditions, look at the indicators, and see, is it the right time? So for example, in the beginning of the video, I said we expect this to pull up, and sure enough, it's starting to pull up. No two has now flipped down to, let's just open this up. No two's now flipped down to 39.50. So this is actually at the second node. The primary node's up to 4K. My little butterfly is right there. So this could pull up, and here actually is the previous chart. Remember, we said it was down, now it's going up. So the market does change, and that prediction, this blue line, changes with it. Here's the previous, here's the current. So main takeaways here, is Magic 8-Ball perfect? No, is it making money? Yes, how much money? Honestly, some friends have crunched some numbers. I am a nuts and bolts, very mathematical, technical kind of guy, so I'm gonna keep running this and shoving things into a database. And probably once a month, once a year, I'm going to pull it out and say, give me hard numbers, I wanna know, not just SPX, but everything, how accurate is it? So the also final takeaway here is it depends on whether you hold it to expiration, or if you just take profit and go, and what type of trade you do, and when you enter in market conditions, and yada, yada, yada. So, be careful, use common sense. Don't rely solely on Magic 8-Ball, this was designed to be an indicator. I hope this was helpful and happy trading.