Free technical analysis tools are available to all traders. This means that advanced mathematical tools can offer some advantage and greater success compared to average traders who use traditional technical analysis. Here are the best mathematical tools that are used to predict the values of stocks, currencies, currency pairs, Bitcoin and other cryptocurrencies -- but there is one thing that is more important than anything else in financial time series prediction...
Time series analysis tools like ARIMA (AutoRegressive Integrated Moving Average) and GARCH (Generalized Autoregressive Conditional Heteroskedasticity) models can be used for financial time series prediction.
Financial forecasting with neural networks have given promising results too. Neural network architectures like LSTM (Long Short-Term Memory) and GRU (Gated Recurrent Unit) for example.
Machine learning libraries can be used to develop custom predictive models. Libraries like TensorFlow, PyTorch and scikit-learn offer for developers more freedom than time series analysis and forecasting with neural networks.
High volatility and interconnectedness of FOREX markets create an advantage for individual developers but complex financial scenarios and the inherent unpredictability in FOREX markets make careful risk analysis important.
There are at least three suitable mathematical tools for FOREX prediction. Kalman filters are excellent for estimating unobserved states in dynamic systems such as currency exchange rates. Monte Carlo simulations and chaos theory models can also be applied to exchange rates and currency pairs.
Due to decentralized nature of all cryptocurrencies and compared to stock market, Bitcoin's price movements are even more unique than those of currency pairs like EUR/USD. At least three mathematical tools can be recommended for Bitcoin prediction.
Wavelet analysis can identify patterns following short fast movements in time series data, which may be useful for Bitcoin price forecasting. Analyzing blockchain-specific indicators could potentially outperform general market predictors but quantum computing may revolutionize cryptocurrency prediction and trading strategies.
Traditional technical analysis is a good tool for traders -- but not good, if all traders use it in the same way. Mathematical tools listed here for stock market, FOREX, Bitcoin and other cryptocurrencies predicting are better -- but not much better if there are a great number of users. The best tool is not available to everybody. This is why it was developed for true individuals. Those who are almost invisible.
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