Input for Stock Data Prediction Algorithms

What can be used for input to stock data prediction system? In this post we will consider some indicator that often are used for stock data forecasting. The links to information about indicators and how to calculate will be also provided.

Moving averages are often used in technical analysis. A few examples: Simple Moving Average (SMA) – to calculate SMA for period of n days we take sum of prices for the n days going back and divide by n. Then move to next day and do it again.

Exponential Moving Average (EMA) – with this moving average the recent data are getting more weight than other. With SMA all data points are getting the same weight.

Here is the indicator that uses prices and volume: Force Index. In two words it is showing how strong is the current trend, how likely it will continue or change.[1] Force index for 1 period can be calculated as

Force Index(1) = (Close_Price (current) – Close_Price (prev)) x Volume

The list of indicators with the information how they are calculated can be found at [2]. They are divided in 3 groups, price based, volume based and breadth indicators. Breadth indicators are based on statistics derived from the broad market. Some papers on stock data forecasting also describe very well the list of variables that were chosen for input.

If we look we can find that there are many different choices but it can improve the quality of forecast accuracy.[3],[4] Not only price , volume or other market statistics can be used for stock market forecasting. Textual web data can be also used but it requires web/text mining processing. You can find some example at [5]


1.How to Use Force Index
2.Technical analysis From Wikipedia, the free encyclopedia
3. The Comparison of Methods Artificial Neural Network with Linear Regression Using Specific Variables for Prediction Stock Price in Tehran Stock Exchange Reza Gharoie Ahangar,Mahmood Yahyazadehfar,Hassan Pournaghshband (IJCSIS) International Journal of Computer Science and Information Security, Vol. 7, No. 2, February 2010
4.Financial Stock Market Forecast using Data Mining Techniques K. Senthamarai Kannan, P. Sailapathi Sekar, M.Mohamed Sathik and P. Arumugam, IMECS 2010, hong Kong
5.Daily Stock Market Forecast from Textual Web Data B. Wuthrich, V. Cho, S. Leung, D. Permunetilleke, K. Sankaran, J. Zhang, W. Lam, The Hong Kong University of Science and Technology
6. Technical Indicators and Overlays From – ChartSchool 7.Financial Stock Market Forecast using Data Mining Techniques K. Senthamarai Kannan, P. Sailapathi Sekar, M.Mohamed Sathik and P. Arumugam

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