How (NOT) To Predict Stock Prices With LSTMs
Stocks and Machine Learning — a combination made in heaven. But are things as easy as they appear to be?
Not so recently, a brilliant and ‘original’ idea suddenly struck me — what if I could predict stock prices using Machine Learning. After all, a time series can be easily modeled with an LSTM. I could see myself getting rich overnight! If this is so easy, why hasn’t anyone done it yet?
Very excited at my bright prospects, I powered up my laptop, opened Google, and keyed in “predict stock prices LSTM python.” The results poured in — and very quickly, I realized that my idea was not very original. Well, so much for that. Anyway, I went through many of these articles, and each one of them seemed to have gotten surprisingly good results. But the tutorial ends there — no one put it to test with real money. Why aren’t these people millionaires yet? Something was fishy.
As a disclaimer, note that none of the contents of this article is financial advice and is purely educational. Quite obvious, I know, but needs to be said. On the contrary, I am trying to educate you on how to not be fooled by this, and start using your head.
Nowadays, with Stocks and Machine Learning both becoming so hands-on…
