Beautiful Fractals as a Crystal Ball for Financial Markets? - Investment Decision Support System Based on Image Recognition Using Artificial Intelligence

Authors

DOI:

https://doi.org/10.5750/jpm.v14i2.1804

Keywords:

Machine Learning, Fractal Geometry, Technical Analysis, Big Data, Trend Prediction

Abstract

The work by Mandelbrot develops a basic understanding of fractals and the artwork of Jackson Pollok to reveal the beauty fractal geometry. The pattern of recurring structures is also reflected in share prices. Mandelbrot himself speaks of the fractal heart of the financial markets. Previous research has shown the potential of image recognition. This paper presents the possibility of using the structure recognition capability of modern machine learning methods to make forecasts based on fractal course information. We generate training data from real and simulated data. These data are represented in images to train a special artificial neural network. Subsequently, real data are presented to the network for use in predicting. The results show that the forecast of time series based on stock price illustration, compared to a benchmark, delivers promising results. This paper makes two essential contributions to research. From a theoretical point of view, fractal geometry shows that it can serve as a means of legitimation for technical analysis. From a practical point of view, highly developed methods from the field of machine learning are able to recognize patterns in data through appropriate data transformation, and that models such as random walk have an informational content that can be used to train machine learning models.

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Published

2020-12-21

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Section

Articles