Soft Computing methods for High frequency tradin

What is High Frequency Trading Commodity trading using computers Can perform over a million transactions per second Constantly moving orders on and off the market as prices change Use of soft computing for decision making and predictions

Fuzzy Logic Fuzzy logic is not used on its own Used with neural networks

Genetic Algorithms Used to optimize trading models and strategy – Trying to match previous market patterns Used in training neural networks Fitness function – Practice trading with real market information – Most profitable genes get passed on

Neural Networks Used to detect patterns in the market Can use recent transaction history – Isn’t technically insider trading Technically legal is the best kind of legal Based on the assumption of strong EMH Most published research is about predictions on price only – Only useful for eliminating strategies

For better forecasting Recurrent neural networks are used – Specific information could not be found