Expert system for predicting stock market timing using a candlestick chart

摘要

It has been one of the greatest challenges to predict the stock market. Since stock prices vary dramatically, it is important to determine when to buy and sell stocks in order to get high returns from stock investment. In this study, we have developed a candlestick chart analysis expert system, or a chart interpreter, for predicting the best stock market timing. The expert system has patterns and rules which can predict future stock price movements. Defined patterns are classified into five groups with respect to their meanings: falling, rising, neutral, trend-continuation and trend-reversal patterns. The experimental results revealed that the developed knowledge base could provide excellent indicators with an average hit ratio of 72% to help investors get high returns from their stock investment. Through experiments from January 1992 to June 1997, it was proven that the developed knowledge base was time- and field-independent.