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Stock Evaluation Using Fuzzy Logic

Author

Listed:
  • HUSSEIN DOURRA

    (Wayne State University, Department of Electrical Engineering, 5676 Dacosta, Dearborn Hts. Michigan 48127, USA)

  • PEPE SIY

    (Wayne State University, Department of Electrical Engineering, 5676 Dacosta, Dearborn Hts. Michigan 48127, USA)

Abstract

We use fuzzy logic engineering tools to detect human behavior in the finance arena, specifically in the technical analysis field. Since technical analysis theory consists of indicators used by experts to evaluate stock prices, the new proposed method maps these indicators into new inputs that can be fed into a fuzzy logic system. This system can create an optimum computerized model to evaluate stock price movement. This method relies on human psychology to predict human behavior when certain price movements or certain price formations occur. The success of the system is measured by comparing system output versus stock price movement. The new stock evaluation method is proven to exceed market performance and it can be an excellent tool in the technical analysis field. The flexibility of the system is also demonstrated.

Suggested Citation

  • Hussein Dourra & Pepe Siy, 2001. "Stock Evaluation Using Fuzzy Logic," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 585-602.
    • Handle: RePEc:wsi:ijtafx:v:04:y:2001:i:04:n:s0219024901001188
    DOI: 10.1142/S0219024901001188
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