Author: Zen and the Art of Computer Programming
1.1 Overview
According to the "Global Economic Prospects" report released by the World Bank, the global GDP will reach 17 trillion US dollars in 2022, an increase of 9% over the previous year and a record high. The domestic economy is still in a period of high-speed growth, but at the same time it is also facing challenges such as huge structural crises, trade frictions, and industrial upgrading, which have brought huge profits and uncertainties to enterprises. As the international financial market pays more and more attention to the Chinese stock market, many investors are seeking relevant data on the Chinese stock market, and learning from foreign mature machine learning models can help them better understand the information of the domestic stock market. This article will introduce how to use machine learning to predict stock prices, and discuss the key links in three aspects: data preparation, feature engineering, model selection and parameter adjustment. It is hoped that through the study of this article, investors can accurately predict the domestic stock market and help companies achieve their profit goals.
1.2 Research background and significance
1.2.1 Why predict stock prices?
Over the past few decades, the stock market has had a bumpy takeoff. In 1971, the U.S. stock market was listed for the first time; from 1980 to 1993, the stock market has been on an upward trend; in 2007, the U.S. stock market crashed and experienced a 12-year bull market. Due to various reasons such as economic crisis, industrial transformation, and policy orientation, the stock market has ushered in a new climax. Today, the stock market is showing increased volatility, slower rallies, and accelerated declines.
For investors, forecasting stock prices can help them make rational judgments when buying, and help them avoid being "beaten to death" by some stocks with bad stock prices. At the same time, predicting stock prices can also provide references for retail investors and guide them in formulating selling strategies. Predicting the stock price is of great significance. It injects vitality into the stock market, provides information, and promotes the stability and harmony of the market.
1.2.2 Problems with traditional methods
The current popular methods of predicting stock prices are mainly based on the following aspects: