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Global Stock Market Prediction Based on Stock Chart Images Using Deep Q-Network

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Listed:
  • Jinho Lee
  • Raehyun Kim
  • Yookyung Koh
  • Jaewoo Kang

Abstract

We applied Deep Q-Network with a Convolutional Neural Network function approximator, which takes stock chart images as input, for making global stock market predictions. Our model not only yields profit in the stock market of the country where it was trained but generally yields profit in global stock markets. We trained our model only in the US market and tested it in 31 different countries over 12 years. The portfolios constructed based on our model's output generally yield about 0.1 to 1.0 percent return per transaction prior to transaction costs in 31 countries. The results show that there are some patterns on stock chart image, that tend to predict the same future stock price movements across global stock markets. Moreover, the results show that future stock prices can be predicted even if the training and testing procedures are done in different countries. Training procedure could be done in relatively large and liquid markets (e.g., USA) and tested in small markets. This result demonstrates that artificial intelligence based stock price forecasting models can be used in relatively small markets (emerging countries) even though they do not have a sufficient amount of data for training.

Suggested Citation

  • Jinho Lee & Raehyun Kim & Yookyung Koh & Jaewoo Kang, 2019. "Global Stock Market Prediction Based on Stock Chart Images Using Deep Q-Network," Papers 1902.10948, arXiv.org.
  • Handle: RePEc:arx:papers:1902.10948
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    File URL: http://arxiv.org/pdf/1902.10948
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    References listed on IDEAS

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    Cited by:

    1. Supriya Bajpai, 2021. "Application of deep reinforcement learning for Indian stock trading automation," Papers 2106.16088, arXiv.org.
    2. Huifang Huang & Ting Gao & Yi Gui & Jin Guo & Peng Zhang, 2022. "Stock Trading Optimization through Model-based Reinforcement Learning with Resistance Support Relative Strength," Papers 2205.15056, arXiv.org.
    3. Jinho Lee & Jaewoo Kang, 2020. "Effectively training neural networks for stock index prediction: Predicting the S&P 500 index without using its index data," PLOS ONE, Public Library of Science, vol. 15(4), pages 1-20, April.
    4. Titi Purwandari & Riaman & Yuyun Hidayat & Sukono & Riza Andrian Ibrahim & Rizki Apriva Hidayana, 2023. "Selecting and Weighting Mechanisms in Stock Portfolio Design Based on Clustering Algorithm and Price Movement Analysis," Mathematics, MDPI, vol. 11(19), pages 1-22, October.
    5. Rachna Sable & Shivani Goel & Pradeep Chatterjee, 2024. "Deep Learning Model for Fusing Spatial and Temporal Data for Stock Market Prediction," Computational Economics, Springer;Society for Computational Economics, vol. 64(3), pages 1639-1662, September.

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