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Thread: Neural network stock price prediction

  1. #1 Neural network stock price prediction 
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    Does anyone knows on real results of implementing neural networks to predict
    stock market prices and to make profits on it?What were real profits in % from
    initial price of the project (harware+software+programmers)?If this method gives some
    stable earnings and there will be more people who make money this way,does it mean
    that profitability of this method will sharply decline?


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  3. #2  
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    Make your own prediction. Like Alternative Fuel.....


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    Forum Professor river_rat's Avatar
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    Quote Originally Posted by Stanley514 View Post
    Does anyone knows on real results of implementing neural networks to predict
    stock market prices and to make profits on it?
    Typically extremely low sharpe ratios with very low signal to noise ratios - taking trading costs into account negative returns.

    If this method gives some stable earnings and there will be more people who make money this way,does it mean
    that profitability of this method will sharply decline?
    Typically yes, the market gets driven to efficiency in that as more people attempt to profit from some form of market inefficiency they make that section more efficient. Here is an easy example, lets say I have some magical machine that tells me with certainty that the price of some share on Monday will always be 10% higher than it is on Thursday. I would use that signal to short the share today and buy it back on thursday, thus making the 10% return. But my actions will decrease the share price today and increase it on thursday and thus destroy the behaviour I am trying to profit off. If enough people try do the same trade we all drive the stock movement back to random noise (efficiency).
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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