Intelligent stock trading system based on SVM algorithm and oscillation box prediction

Abstract

The stock market is considered as a high complex and dynamic system. Many machine learning and data mining technologies are used for stock analysis, but it still leaves an open question about how to integrate these methods with the plentiful knowledge and techniques accumulated in stock investment which are critical to the successful stock analysis. In this paper, we propose an intelligent stock trading system by combining support vector machine (SVM) algorithm and box theory of stock. The box theory believes a successful stock buying/selling generally occurs when the price effectivley breaks out the original oscillation box into another new box. In the system, support vector machine algorithm is utilized to make forecasts of the top and bottom of the oscillation box. Then a trading strategy based on the box theory is constructed to make trading decisions. The different stock movement patterns, i.e. bull, bear and fluctuant market, are used to test the feasibility of the system. The experiments on S&P500 components show a promising performance is achieved.