This chapter introduces the concept of evolutionary computing. Algorithms derived from the theory of evolution are particularly efficient in solving large combinatorial or NP problems. Evolutionary computing has been pioneered by John Holland [10:1] and David Goldberg [10:2]. Their findings should be of interest to anyone eager to learn about the foundation of genetic algorithms (GA) and artificial life.
This chapter covers the following topics:
The origin of evolutionary computing
The theoretical foundation of genetic algorithms
Advantages and limitations of genetic algorithms
From a practical perspective, you will learn how to:
Apply genetic algorithms to leverage technical analysis of market price and volume movement to predict future returns
Evaluate or estimate the search space
Encode solutions in the binary format using either hierarchical or flat addressing
Tune some of the genetic operators
Create and evaluate fitness functions