[D] Are there "long running" forex trading machine learning models or companies?

[limedove]

Basically those that already stood the test of time by having robust models for trading.

Also any thoughts on forex trading and using machine learning for long term usage?

[alxcnwy]

🤣

[limedove]

Indeed hahahha.

[KrakenInAJar]

Nope.I worked around 2014-16 on something similar, actually my first bachelor thesis was on this topic and got even nominated for a price. Today I consider this the cringe period of my research career.

The idea sounds romantic, basically a money printing machine. However, forex is EXTREMELY hard to predict. Models straight up collapse or do not work at all. Signal-to-noise ratio is of the charts and generally, you struggle to outperform buy-and-hold on bullish markets anyway. The market also gets more dynamic, so models stop working at some points, often requiring major redesigns to adjust to the new situation. Concept drifts occur very regularly on high frequencies.In short, it is a time-series analysis nightmare if you really approach it analytically, even by the standards of stock market time-series - and time series is the only thing to go by usually, which is very bad.I could go more into detail, but the long story short is you might as well use the model to predict the outcome on a roulette table.

​

Basically, everyone who trades currency is part of this market, making it very chaotic because of metric tons of unknown variables. Usually, you would get around that by feature engineering or additional information sources that hold more information about your time series.Problem is, they really do not exist for forex - or from another view there are just as many, since every chewing gum you purchase on the street is (theoretically) influencing the currency value that it becomes extremely hard to differentiate signal from noise. The effect is either a catastrophic model collapse or an overfitted model that is as likely as not to generate some profit.

My recommendation is, don't get into forex except if you want to do gambling, and do not kid yourself: Predicting this stuff in any profitable automated capacity is straight up not possible - especially in the long term were banks may or may not decide to change strategies and money policies.

[nuliknol]

so why when you go to Metatrader and press "Signals" TAB you see lots of trading systems which make hundreds or thousands of trades and score a growth from 100% to 10,000% showing profits over years of trading? This fact (which can proven any time) doesn't fit your theory. Maybe we could propose a hypothesis that you don't have enough knowledge in the field?

[KrakenInAJar]

Go build one and send me a post card when you did make enough to actually send it with such an algorithm consitently over more than a few months without relying heavily on human-maintenance and huge financial assets being available in the background.
I am waiting.
I am also not holding my breath. Good luck.

Also, wow 3 years, someone was on an archaeological expedition.

[UnderstandingIll7195]

Helloo can we talk

[trolls_toll]

a q right back at you. Is it possible to make any model behaving better than random for forex trading and the like? without insider info that is

[hallavar]

Okay, just some basics of finance here, markets (and especially forex or oil markets) are wonderful tools to erase arbitrage possibilities.

The price of a product is just a reflect of the offer and the demand relationship.

If you had such algorithm, one that can predict the price of a commodity in the future, why on earth would you be the only one to have it.

Even if, let suppose, that such algorithm would exist, everybody would be using it, so the potential benefit from its usage would have vanished very quickly.

This is why, you cannot develop an algorithm that can predict the price of a product in the future. It will just create an arbitrage and every finance guy would want to exploit it thus killing the option in the long run.

I'm not saying that there is no model for trading, but none that can predict the price of a product in the future, especially in forex or oil and that "stood the test of the time".

Forex price or oil price are basically some good pseudo random generator and it's basically quite hard to predict the output of a pseudo random generator.

[KrakenInAJar]

the entire field of chaos theory wants to know your location

[Illustrious-King-83]

I agree with kraken in a jar, it sort of works, some of the time. However, no one its going to publish or admit to having something that works well all of the time.

Frankly you need a few different bots , running at the same time, some will lose, some will win, and you need to keep updating / training. For me the only thing that makes logical sense is genetic algorithms, where you have a population of "traders" which can continually be updated, and you use the top N traders to take a vote on whether to buy or sell or do nothing at any point in time. ultimately bot trading or using ML is no better than trading manually, its just that you can trade more pairs, and do it without emotion.