Confidence intervals are a statistical tool that describes the accuracy of a prediction, while neural networks provide predictions. This article combines the two to define the risk in a trade."In recent years, neural networks have gained acceptance in solving problems related to portfolio management and market timing. Traders trust these models because they are accurate; nevertheless, many traders still view neural nets as a black box where data goes in one end and a prediction comes out the other. Now it's time to shine some light into that box, gain additional information from your neural nets, and use that information to build successful trading strategies. "
"Confidence intervals, like the outermost ring on a marksman's target, place boundaries on a prediction's error. While it would be nice to hit the bull's-eye, there's a far greater probability of hitting the target somewhere inside the outermost ring."
