Recommended Positions: Long
Forecast Length: 3 Months (3/23/2015 - 6/23/2015)
I Know First Average: 32.93%
I Know First Research | May 8th 2014How Can We Predict the Financial Markets by Using Algorithms? Common fallacies about markets claim markets are unpredictable. However, chaos theory together with powerful algorithms proves such statements are wrong. Markets are chaotic systems with complex dynamics, yet to a certain extent we can make valid stock market forecasts. Using these forecasts generated by cutting-edge predictive algorithms together with a careful risk management strategy may give a trader a significant competitive advantage.
While the financial markets are very intricate systems, determining the best components of a successful portfolio does not have to be. Investors are familiar with the saying, “buy low, sell high” but this does not provide enough context to make proper investment decisions. Every investors dream is prior knowledge of the direction of the market before it happens. Although this is incredibly difficult to do accurately and consistently, it is now possible to create financial market forecasts with algorithms. The quickly growing trend of financial advisors utilizing advanced algorithms, is part of a much larger trend of our entire society using “Big Data” solutions for a diversified pool of needs, including predicting credit risk, demand for goods and services, querying social networks to gage market sentiment, machine readable format company reports, discounts and advertising targeting as well as many more applications. In fact, the Chinese government and IBM (IBM) have teamed up utilizing Big Data to finally tackle the far-east nation’s austere pollution problem.
By incorporating popular types of convergence averages and moving averages that have been traditionally used to forecast assets for many years with more sophisticated technology and genetic algorithms, professionals are now capable of building complex and intelligent algorithms that can make these predictions more accurate and efficient. Even when financial bubbles and market corrections lurk, a proper understanding of how the markets function plus a vigilant risk management strategy has always been necessary to survive in the financial wilderness. However, investors today have the option to take advantage of state-of-the-art algorithms in conjunction with traditional forms of analysis in order to enhance portfolio performance, verify their own analysis and respond to opportunities faster.
This overview is intended to further divulge this mysticism surrounding Big Data analytics and provide insights about the potential return on investment analytics can enable for those who embrace these capabilities. Financial professionals that step ahead of the curve today with avant-garde strategies such as these will be the definitive beneficiaries of predictive analytics, leading Wall Street with a much more proactive and cost-effective approach of algorithmic trading.
I Know First-Daily Market Forecast, does not provide personal investment or financial advice to individuals, or act as personal financial, legal, or institutional investment advisors, or individually advocate the purchase or sale of any security or investment or the use of any particular financial strategy. All investing, stock forecasts and investment strategies include the risk of loss for some or even all of your capital. Before pursuing any financial strategies discussed on this website, you should always consult with a licensed financial advisor.