Identifying Current Market Conditions With Machine Learning

By Inovance Knowing how different market conditions affect the performance of your strategy can have a huge impact on your returns. Certain strategies will perform well in highly volatile, choppy markets while others need a strong, smooth trend or they risk long periods of drawdown. Figuring out when you should start or stop trading a strategy, adjusting your risk and money management techniques, and even setting the parameters of your entry and exit conditions are all dependent on the market “regime”, or current conditions. Being able to identify different market regimes and altering your strategy accordingly can mean the difference between success and failure in the markets. In this article we will explore how to identify different market regimes by using a powerful class of machine-learning algorithms known as “Hidden Markov…


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