Lecture Notes in Computer Science, 2008, Volume 4974/2008, 93-102, DOI: 10.1007/978-3-540-78761-7_10

Horizontal Generalization Properties of Fuzzy Rule-Based Trading Models

Célia da Costa Pereira and Andrea G. B. Tettamanzi

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Abstract

We investigate the generalization properties of a data-mining approach to single-position day trading which uses an evolutionary algorithm to construct fuzzy predictive models of financial instruments. The models, expressed as fuzzy rule bases, take a number of popular technical indicators on day t as inputs and produce a trading signal for day t + 1 based on a dataset of past observations of which actions would have been most profitable.
The approach has been applied to trading several financial instruments (large-cap stocks and indices), in order to study the horizontal, i.e., cross-market, generalization capabilities of the models.

Keywords  Data Mining - Modeling - Trading - Evolutionary Algorithms

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