Algorithmic Trading Model for Stock Price Forecasting Integrating Forester with Golden Ratio Strategy

• Main Authors: Govindan, Niranjana, Baskaran, Bharathi, Azizan, Azizul, Yakub, Fitri, Dhamanti, Inge, Dhaya, C
• Format: Conference Proceeding
• Language: English
• Subjects: Adaptation models; Data models; Deep Learning; Feature extraction; Forecasting; Forestry; Machine Learning; Machine learning algorithms; Nifty 50; Nifty Bank Stocks; Predictive models; Reinforcement learning; Soft sensors; Testing
• ISSN: 2572-7621
• DOI: 10.1109/R10-HTC59322.2024.10778666

Algorithmic trading has emerged as a powerful tool for making data-driven trading decisions in financial markets. In this paper, we present an innovative algorithmic trading model for stock price forecasting that integrates forest-based machine learning algorithms with the Golden Ratio strategy. Our proposed approach aims to leverage the predictive power of machine learning while incorporating insights from technical analysis to enhance trading performance and profitability. The methodology involves data collection and preprocessing, feature engineering, model development, and performance evaluation. Historical stock price data, financial indicators, and sentiment analysis data are gathered and pre-processed to ensure data quality. Feature engineering techniques are applied to extract relevant features, and forest-based machine learning algorithms are trained on the data to forecast stock prices. The Golden Ratio strategy is integrated into the trading model to identify the entry point and exit point. Empirical validation and performance evaluation demonstrate the effectiveness and robustness of the proposed approach. Through back testing and simulation-based testing, we evaluate the model's accuracy, profitability, and risk-adjusted returns. Our findings contribute to the advancement of algorithmic trading research and practice, offering insights into the potential benefits of combining machine learning algorithms with established trading strategies. The proposed hybrid model incorporates Golden Ratio Strategy, integrating Random Forest (RF). The results of the proposed random forest with Golden Ratio Strategy are compared with the results of individual model. This comparison helps in proving the efficiency of the proposed model.