New article: Random Forests Predict Trends
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New article Random Forests Predict Trends has been published at mql5.com:
The initial aim of building any trading system is to predict behavior of a market instrument, for instance, a currency pair. The objectives of predictions can be different. We shall confine ourselves with predicting trends, or to be precise, predicting growth (long positions) or decline (short positions) of currency pair quotes.
To predict currency behavior, a trader attaches a couple of indicators to a currency pair chart and tries to find a pattern that has predictive power.
This article considers automatic selection of patterns and their preliminary evaluation using the Rattle package, which is a library of the R statistics analysis system.
We are going to use R for predicting behavior of currency pairs which is ideal for forecasting financial markets. Saying that, R is primarily a programming language for qualified statisticians and is beyond comprehension for many traders. The complexity of R is exacerbated by the fact that the tools for prediction are numerous and scattered across many packages that make the basic functionality of R.
Rattle (the R Analytical Tool To Learn Easily) unites a set of R packages, which are important for developing trading systems but not easy to use separately by novices. One does not have to know and understand R to begin working with Rattle. The result of working with Rattle will be code in R, which can be used for developing a real trading system. However, at this stage knowledge of R is going to be required.
In any case, Rattle is an irreplaceable tool at the stage of designing a trading system. It allows even beginners to quickly see the results of various ideas and assess them.
Rattle (Williams, 2009) is free software with open source code created as a package, which is a part of R (R Developing working group, 2011). Since it is free software, source code of Rattle and R is available without limitations. The Rattle source code is written in С and users are allowed and encouraged to study the code, test and extend it.
Author: СанСаныч Фоменко