Volume 20 No 13 (2022)
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An Optimized Machine Learning Model for Candlestick Chart Analysis to Predict Stock Market Trends
Satyakam Behar, Dr.Anurag Sharma
Abstract
Stock market prediction is challenging due to its complex behaviour. Various theories are available for
stock trend prediction. Technical analysis is widely used by researchers in which various charts and
statistics are used to analyse the market trend. Candlestick charts are a useful tool in technical analysis.
However, utilizing candlestick charts with machine learning techniques is still a matter of research. This
paper proposes a model which uses candlestick chart patterns for the trend prediction of Indian and US
stock indices. At first, candlestick patterns are extracted from the historical stock data which results in
the generation of a large number of features. In this work, the Gaussian-modified PSO (g-PSO) is
proposed for feature selection and an optimized K-Nearest Neighbour (KNN) model for trend
prediction. The proposed model is tested on the four stock indices BSE, NIFTY50, S&P500, and DJIA. The
performance metric Accuracy, Precision, Recall, and F1-score are used for the model assessment. The
proposed model gives an average accuracy of 61.4%. The proposed model is compared with the stateof-the art methods and comparatively provides better results
Keywords
Stock Market Forecasting, Candlestick Chart, Machine Learning (ML), K-nearest Neighbour (KNN), Particle Swarm Optimization (PSO), Grid Search
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