Abstract
Dissatisfaction is the first step of progress, this statement serves to be the base of using Artifcial Intelligence in predicting stock prices. A great deal of people dreamed of predicting stock prices faultlessly but it remained only as a dream for those visionaries at that time. The legacy of those visionaries led to the discovery of something concrete and made that dream come to reality, and due to this we can use machine learning methods in today’s era for predicting accurate stock prices. These methods have proved to be extremely beneficial and an easy way for common man to earn quick money if done appropriately. These methods still have drawbacks that are being worked upon and it confirmations immense improvement in the future unlike the prior methods of predicting stock market prices like time-series forecasting that didn’t provide results that satisfying the needs of an investor. As a result, to deal with the volatile and dynamic nature of the market, a link between stock market and Artificial Intelligence was founded that brought about wonders. The three methods that were implemented in the prediction process were Artificial Neural Network (ANN), Support Vector Machine (SVM) and Long Short-Term Memory (LSTM). ANN works on neural network, SVM works using Kernel method and LSTM works using Keras LSTM. Various techniques offered by each methodology are carefully analyzed and it was found that ANN based on neural network provides best results because it considers complex, non-linear relationships and recognizes patterns. While SVM is comparatively a new method and capable of providing better results in the future and LSTM gives good results only when large dataset is given which can be considered a drawback.




Similar content being viewed by others
Explore related subjects
Discover the latest articles and news from researchers in related subjects, suggested using machine learning.Data availability
All relevant data and material are presented in the main paper.
References
Abiodun O, Jantan A, Omolara A, Heliyon KD (2018). State-of-the-art in artificial neural network applications: A survey. Elsevier. https://www.sciencedirect.com/science/article/pii/S2405844018332067
Ahn JJ, Oh KJ, Kim TY, Kim DH (2011) Usefulness of support vector machine to develop an early warning system for financial crisis. Expert Syst Appl 38(4):2966–2973. https://doi.org/10.1016/J.ESWA.2010.08.085
Aldin MM, Dehnavi HD, Entezari S (2012) Evaluating the employment of technical indicators in predicting stock price index variations using artificial neural networks (Case study: Tehran stock exchange). Int J Bus Manage 7:15. https://doi.org/10.5539/IJBM.v7n15p25
Ang KK, Quek C (2006) Stock trading using RSPOP: a novel rough set-based neuro-fuzzy approach. IEEE Trans Neural Networks 17(5):1301–1315. https://doi.org/10.1109/TNN.2006.875996
Angra S, Ahuja S (2017) Machine learning and its applications: a review. Proceedings of the 2017 international conference on big data analytics and computational intelligence, 57–60
Arestis P, Demetriades PO, Luintel KB (2001) Financial development and economic growth: the role of stock markets. J Money, Credit, Bank 33(1):16. https://doi.org/10.2307/2673870
Atiya AF, El-Shoura SM, Shaheen SI, El-Sherif MS (1999) A comparison between neural-network forecasting techniques-case study: river flow forecasting. IEEE Trans Neural Networks 10(2):402–409. https://doi.org/10.1109/72.750569
Bench-Capon TJM, Dunne PE (2007) Argumentation in artificial intelligence. Artif Intell 171(10):619–641. https://doi.org/10.1016/J.ARTINT.2007.05.001
Billmeier A, Massa I, Billmeier A, Massa I (2009) What drives stock market development in emerging markets--institutions, remittances, or natural resources? Emerging Markets Review, 10(1):23–35. https://econpapers.repec.org/RePEc:eee:ememar:v:10:y:2009:i:1:p:23-35
Binoy Varkey S, Belfin RV, Paul GR (2020) Machine learning algorithms using stock market dataset-a comparative study. J Crit Rev 7(15):3517–3526
Bonde G, R. K. the I. C. on G., & 2012, undefined. (n.d.). Stock price prediction using genetic algorithms and evolution strategies. World-Comp.Org. Retrieved December 16, 2022, from http://world-comp.org/p2012/GEM4716.pdf
Borovkova S, Tsiamas I (2019) An ensemble of LSTM neural networks for high-frequency stock market classification. J Forecast 38(6):600–619. https://doi.org/10.1002/FOR.2585
Budiharto W (2021) Data science approach to stock prices forecasting in Indonesia during Covid-19 using long short-term memory (LSTM). J Big Data 2021(8–1):1–9. https://doi.org/10.1186/S40537-021-00430-0
Caporale GM, Howells PGA, Soliman AM (2004). Stock Market Development And Economic Growth: The Causal Linkage. Journal of Economic Development, 29(1), 33–50. https://ideas.repec.org/a/jed/journl/v29y2004i1p33-50.html
Chong E, Han C, Park FC (2017) Deep learning networks for stock market analysis and prediction: methodology, data representations, and case studies. Expert Syst Appl 83:187–205. https://doi.org/10.1016/J.ESWA.2017.04.030
Chopra S, Yadav D, Chopra AN (2019) Artificial neural networks based Indian stock market price prediction: before and after demonetization. Int J Swarm Intell Evolut Comput 8(1):1–7
Cocianu CL, Grigoryan H (2015) An artificial neural network for data forecasting purposes. Informatica Economica 20(2):34–45. https://doi.org/10.12948/issn14531305/19.2.2015.04
Cooray A (n.d.). Cooray, & Arusha. (2010). Do Stock Markets Lead to Economic Growth? J Policy Model, 32(4):448–460. https://econpapers.repec.org/RePEc:eee:jpolmo:v:32:y::i:4:p:448-460
Cristianini N, Shawe-Taylor J (2000) An introduction to support vector machines and other kernel-based learning methods, doi https://doi.org/10.1017/CBO9780511801389
Damrongsakmethee T, Neagoe VE (2020). Stock market prediction using a deep learning approach. Proceedings of the 12th international conference on electronics
Das SP, Padhy S (2012) Support vector machines for prediction of futures prices in indian stock market. Int J Comp Appl 41(3):975–8887
de Oliveira FA, Nobre CN, Zárate LE (2013) Applying Artificial Neural Networks to prediction of stock price and improvement of the directional prediction index – Case study of PETR4, Petrobras. Brazil Exp Sys Appl 40(18):7596–7606. https://doi.org/10.1016/J.ESWA.2013.06.071
Dhenuvakonda P, Anandan R, Kumar N (2020) Stock price prediction using artificial neural networks. J Crit Rev 7(11):846–850. https://doi.org/10.31838/JCR.07.11.152
Di X (2014) Stock trend prediction with technical indicators using SVM. Stanford University. http://finance.yahoo.com
Dike HU, Zhou Y, Deveerasetty KK, Wu Q (2019) Unsupervised learning based on artificial neural network: a review. 2018 IEEE International conference on cyborg and bionic systems. CBS, 2018, 322–327. https://doi.org/10.1109/CBS.2018.8612259
Ding S, Zhu Z, Zhang X (2015) An overview on semi-supervised support vector machine. Neural Comput Appl 2015(28–5):969–978. https://doi.org/10.1007/S00521-015-2113-7
Du J, Liu Q, Chen K, Wang J (2019) Forecasting stock prices in two ways based on LSTM neural network. In: E. Networking, A. C. Conference (Eds.), Proceedings of 2019 IEEE 3rd Information Technology (pp. 1083–1086). ITNEC 2019
Elango NM, Sureshkumar KK (2012). Performance analysis of stock price prediction using artificial neural network. Glob J Comp Sci Tech http://computerresearch.org/index.php/computer/article/view/426
Enisan AA, Olufisayo AO, Enisan AA, Olufisayo AO (2009) Stock market development and economic growth: Evidence from seven sub-Sahara African countries. J Econ Bus, 61(2), 162–171. https://econpapers.repec.org/RePEc:eee:jebusi:v:61:y:2009:i:2:p:162-171
Farahani MS, Hajiagha SHR (2021) Forecasting stock price using integrated artificial neural network and metaheuristic algorithms compared to time series models. Soft Comput 25(13):8483–8513. https://doi.org/10.1007/S00500-021-05775-5
Fischer T, Krauss C (2017) Deep learning with long short-term memory networks for financial market predictions. https://ideas.repec.org/p/zbw/iwqwdp/112017.html
Gholami R, Fakhari N (2017) Support vector machine: principles, parameters, and applications. Handb Neur Comp. https://doi.org/10.1016/B978-0-12-811318-9.00027-2
Graves A (2012) Long short-term memory. 37–45. https://doi.org/10.1007/978-3-642-24797-2_4
Grigoryan H (2016) A stock market prediction method based on support vector machines (SVM) and independent component analysis (ICA). Database Syst J 7(1):12–21
Gupta A (2014) An SVM Based Approach for {I}ndian Benchmark Index Prediction. In: F. Economics & S. S. www.globalbizresearch.org (Eds.), Proceedings of the Third International Conference on Global Business
Guresen E, Kayakutlu G, Daim TU (2011) Using artificial neural network models in stock market index prediction. Exp Sys Appl: Int J 38(8):10389–10397. https://doi.org/10.1016/J.ESWA.2011.02.068
Gururaj V, Shriya V, Ashwini K (2019) Stock market prediction using linear regression and support vector machines. Int J Appl Eng Res, 14(8), 1931–1934. http://www.ripublication.com/ijaer19/ijaerv14n8_24.pdf
Haddad Z, Chaker A, Rahmani A (2017) Improving the basin type solar still performances using a vertical rotating wick. Desalination, Elsevier. https://www.sciencedirect.com/science/article/pii/S0011916416317702
Henrique BM, Sobreiro VA, Kimura H (2018) Stock price prediction using support vector regression on daily and up to the minute prices. J Finan Data Sci 4(3):183–201. https://doi.org/10.1016/J.JFDS.2018.04.003
Henrique BM, Sobreiro VA, Kimura H (2019) Literature review: machine learning techniques applied to financial market prediction. Expert Syst Appl 124:226–251. https://doi.org/10.1016/J.ESWA.2019.01.012
Hochreiter S, Schmidhuber J (1997) Long short-term memory. Neural Comput, Ieeexplore.Ieee.Org, 9(8), 1735–1780. https://ieeexplore.ieee.org/abstract/document/6795963/
Hossain MS, Rokonuzzaman M (2018) Impact of stock market. Trade and bank on economic growth for Latin American Countries: An econometrics approach, 6, 1. http://www.sciencepublishinggroup.com
Hou H, Cheng S-Y (2010) The roles of stock market in the finance-growth nexus: time series cointegration and causality evidence from Taiwan. Appl Financial Econ 20(12):975–981. https://doi.org/10.1080/09603101003724331
Joseph E (2019) Forecast on close stock market prediction using support vector machine (SVM). Int J Eng Res. https://doi.org/10.17577/ijertv8is020031
Kara Y, Boyacioglu MA, Baykan ÖK (2011) Predicting direction of stock price index movement using artificial neural networks and support vector machines: the sample of the Istanbul stock. Exchange 38(5):5311–5319. https://doi.org/10.1016/J.ESWA.2010.10.027
Kecman V (2001) Learning and soft computing. 2001. MIT Press/Bradford …. https://www.researchgate.net/publication/31727392_Learning_and_Soft_Computing_V_Kecman
Khan ZH, Alin TS, Hussain MA (2011) Price prediction of share market using artificial neural network (ANN). Int J Comp Appl 22(2):42–47
Lai CY, Chen RC, Caraka RE (2019) Prediction stock price based on different index factors using LSTM. Proceedings - International conference on machine learning and cybernetics
Lertyingyod W, Benjamas N (2017) Stock price trend prediction using artificial neural network techniques: case study: thailand stock exchange. 20th International computer science and engineering conference: smart ubiquitos computing and knowledge. ICSEC, 2016. https://doi.org/10.1109/ICSEC.2016.7859878
Levine R, Zervos S (1996) Stock market development and long-run growth on JSTOR. The World Bank Economic Review. https://www.jstor.org/stable/3990065
Levine R, Zervos S (1998) Stock markets, banks, and economic growth. American Economic Review, 88, 3. https://www.researchgate.net/publication/4901422_Stock_Markets_Banks_and_Economic_Growth
Li X, Li Y, Yang H, Yang L, Liu XY (2019). DP-LSTM: differential privacy-inspired LSTM for stock prediction using financial news. Arxiv.Org. https://arxiv.org/abs/1912.10806
Liagkouras K Metaxiotis K (2020) No title. Stock market forecasting by using support vector machines (p, 259–271. https://doi.org/10.1007/978-3-030-49724-8_11
Litta AJ, Idicula MS, Mohanty UC (2013) Artificial neural network model in prediction of meteorological parameters during premonsoon thunderstorms. Int J Atmosph Sci. https://doi.org/10.1155/2013/525383
Liu J, Kong X, Xia F, Bai X, Wang L, Qing Q, Lee I (2018) Artificial intelligence in the 21st century. IEEE Access 6:34403–34421. https://doi.org/10.1109/ACCESS.2018.2819688
Madge S, Bhatt S (2015) Predicting stock price direction using support vector machines. https://github.com/SaahilMadge/Spring-2015-IW
Marr D (1976) Artificial Intelligence -- A Personal View. MIT Libraries. https://dspace.mit.edu/handle/1721.1/5776
Marty AL (1961) Gurley and Shaw on Money in a Theory of Finance. J Polit Econ. https://www.jstor.org/stable/1829227
Masoud NMH (2013) The impact of stock market performance upon economic growth. Int J Econ Financ Issues 3(4):788–798
Meesad P, Rasel RI (2017) No Title. Predicting Stock Market Price Using Support Vector Regression, https://doi.org/10.1109/ICIEV.2013.6572570
Min F, Hu Q, Zhu W (2014) Feature selection with test cost constraint. Int J Appr Rea 55(1):167–179. https://doi.org/10.1016/J.IJAR.2013.04.003
Moghaddam AH, Moghaddam MH, Esfandyari M (2016) Stock market index prediction using artificial neural network. J Econ, Finance Administ Sci 21(41):89–93. https://doi.org/10.1016/J.JEFAS.2016.07.002
Moghar A, Hamiche M (2020) Stock market prediction using LSTM recurrent neural network. Elsevier. https://www.sciencedirect.com/science/article/pii/S1877050920304865
Mubeena SK, Kumar MA, Ramya U, Sujatha P, Tech, B. (2020). Forecasting stock market movement direction using sentiment analysis and support vector machine. Int Res J Eng Tech. www.irjet.net
Naik N, Mohan BR (2019) Stock price movements classification using machine and deep learning techniques-the case study of indian stock market. Commun Comp Inf Sci 1000:445–452. https://doi.org/10.1007/978-3-030-20257-6_38
Nandakumar R, Uttamraj KR, Vishal R, Lokeswari YV (2018) Stock price prediction using long short term memory. Int Res J Eng Technol 5(3):342–3348
Nti IK, Adekoya AF, Weyori BA (2020a) Efficient stock-market prediction using ensemble support vector machine. Open Comp Sci 10(1):153–163. https://doi.org/10.1515/COMP-2020-0199
O’Leary DE (2013) Artificial intelligence and big data. IEEE Intell Syst 28(2):96–99. https://doi.org/10.1109/MIS.2013.39
Pan J, Zhuang Y, Fong S (2016) The impact of data normalization on stock market prediction: using SVM and technical indicators. Commun Comp Inf Sci 652:72–88. https://doi.org/10.1007/978-981-10-2777-2_7
Pang X, Zhou Y, Wang P, Lin W, Chang V (2018) An innovative neural network approach for stock market prediction. J Supercomput 2018(76–3):2098–2118. https://doi.org/10.1007/S11227-017-2228-Y
Parmar I, Agarwal N, Saxena S, Arora R, Gupta S, Dhiman H, & Chouhan L (2018a) Stock market prediction using machine learning. ICSCCCst international conference on secure cyber computing and communications, 2011–2018a
Patil SS, Patidar K, Jain M (2016) Stock market trend prediction using support vector machine. Int J Curr Trends Eng Technol, 2(1), 18–25. http://casopisi.junis.ni.ac.rs/index.php/FUAutContRob/article/view/585
Pedrozo D, Barajas F, Estupiñán A, Cristiano KL, Triana DA (2020) Development and implementation of a predictive method for the stock market analysis, using the long short-term memory machine learning method. J Phys: Conf Ser 1514(1):012009. https://doi.org/10.1088/1742-6596/1514/1/012009
Perwej Y, Perwej A, Perwej Y, Perwej A (2012) Prediction of the bombay stock exchange (BSE) market returns using artificial neural network and genetic algorithm. J Intell Learn Syst Appl 4(2):108–119. https://doi.org/10.4236/JILSA.2012.42010
Pradhan A, Model, S. (2012). Support Vector Machine-A Survey. In undefined
Pradhan RP, Arvin MB, Samadhan B, Taneja S (2013) The impact of stock market development on inflation and economic growth of 16 asian countries: a panel VAR Approach. Appl Econom Int Devel, 13(1), 203–218. https://ideas.repec.org/a/eaa/aeinde/v13y2013i1_16.html
Qiu M, Song Y (2016) Predicting the direction of stock market index movement using an optimized artificial neural network model. PLoS ONE 11:5. https://doi.org/10.1371/JOURNAL.PONE.0155133
Qiu J, Wang B, Zhou C (2020) Forecasting stock prices with long-short term memory neural network based on attention mechanism. PLoS ONE 15:1. https://doi.org/10.1371/JOURNAL.PONE.0227222
Rahul, Subrat S, Priyansh, K Monika 2020 Analysis of various approaches for stock market prediction. J Stat Manag Syst, 23(2):285–293, https://doi.org/10.1080/09720510.2020.1724627
Reddy VKS (2018) Stock market prediction using machine learning. Int Res J Eng Technol (IRJET). https://doi.org/10.13140/RG.2.2.12300.77448
Reddy Nadikattu R (2017) The supremacy of artificial intelligence and neural networks. Int J Creat Res Thoughts 5(1):2320–2882
Roondiwala M, Patel H (2017) Predicting stock prices using LSTM. Int J Sci Research (IJSR). https://doi.org/10.21275/ART20172755
Rosillo R, Giner J, la Fuente DD (2014) Stock Market simulation using support vector machines. J Forecast 33(6):488–500. https://doi.org/10.1002/FOR.2302
Samek D, Vařacha P (2013) Time series prediction using artificial neural networks: single and multi-dimensional data Request PDF. Int J Math Model Meth Appl Sci, 7(1):38–46. https://www.researchgate.net/publication/288530573_Time_series_prediction_using_artificial_neural_networks_Single_and_multi-dimensional_data
Saud AS, Shakya S (2020) Analysis of look back period for stock price prediction with RNN variants: a case study on banking sector of NEPSE. Procedia Comp Sci 167:788–798. https://doi.org/10.1016/J.PROCS.2020.03.419
Sch"olkopf B, Smola AJ (2002) Support vector machines and kernel algorithms. In: The handbook of brain theory and neural networks, pp 1119–1125
Schapire RE (2003) The boosting approach to machine learning: an overview. Springer, Berlin, pp 149–171. https://doi.org/10.1007/978-0-387-21579-2_9
Seetanah B, Subadar U, Sannassee RV, Lamport M, Ajageer V (2012) Stock market development and economic growth: Evidence from least developed countries. Competence centre on Money. https://ideas.repec.org/p/mtf/wpaper/1205.html
Selvamuthu D, Kumar V, Mishra A (2019) {I}ndian stock market prediction using artificial neural networks on tick data. Financial Innov 2019(5–1):1–12. https://doi.org/10.1186/S40854-019-0131-7
Selvin S, Vinayakumar R, Gopalakrishnan EA, Menon VK, Soman KP (2017) Stock price prediction using LSTM. RNN and CNN-sliding window model, 1643–1647
Shanmuganathan S (2016) Artificial neural network modelling: an introduction. Stud Computat Intell 628:1–14. https://doi.org/10.1007/978-3-319-28495-8_1
Sharma V, Rai S, Dev A (2012) A comprehensive study of artificial neural networks. Int J Adv Res Comp Sci Softw Eng 2:10
Sidhu P, Aggarwal H, Lal M (2021) stock market prediction using LSTM. https://doi.org/10.4108/EAI.27-2-2020.2303545
Simon S, Raoot A, Professor A (2012) Accuracy driven artificial neural networks in stock market prediction. Int J Soft Comp (IJSC) 3:2. https://doi.org/10.5121/ijsc.2012.3203
Smagulova K, James AP (2020) Overview of long short-term memory neural networks. Model Optimiz Sci Technol 14:139–153. https://doi.org/10.1007/978-3-030-14524-8_11
Stiglitz JE (1985) Credit markets and the control of capital. J Money, Credit Bank, 17(2):133–152. https://econpapers.repec.org/RePEc:mcb:jmoncb:v:17:y:1985:i:2:p:133-52
Tripathy N (2019) Stock price prediction using support vector machine approach. https://doi.org/10.33422/conferenceme.2019.11.641
Vaiz J, Ramaswami M (2016) a hybrid model to forecast stock trend using support vector machine and neural networks. Int J Eng Res Develop (IJERD). https://www.academia.edu/download/54665553/H130925259.pdf
van Houdt G, Mosquera C, Nápoles G (2020) A review on the long short-term memory model. Artif Intell Rev 2020(53–8):5929–5955. https://doi.org/10.1007/S10462-020-09838-1
Vapnik V (1998) The support vector method of function estimation. Nonlin Model. Springer, Boston, pp 55–85. https://doi.org/10.1007/978-1-4615-5703-6_3
Wanjawa BW (2016). Evaluating the performance of ANN prediction system at Shanghai Stock market in the period, 21. https://www.researchgate.net/publication/311514572_Evaluating_the_Performance_of_ANN_Prediction_System_at_Shanghai_Stock_Market_in_the_Period_21-Sep-2016_to_11-Oct-2016
Yang R, Yu L, Zhao Y, Yu H, Xu G, Wu Y, Liu Z (2020) Big data analytics for financial Market volatility forecast based on support vector machine. Int J Inf Manage 50:452–462. https://doi.org/10.1016/J.IJINFOMGT.2019.05.027
Zeng Y, Liu X (2018) A-stock price fluctuation forecast model based on LSTM. Proceedings - 2018 14th international conference on semantics, 261–264
Zhang L, Pan Y, Wu X, Skibniewski MJ (2021) Introduction to artificial intelligence. In Lecture notes in civil engineering. Vol. 163, Cham, pp. 1–15
Zou Z, Qu Z (2020) Using LSTM in stock prediction and quantitative trading. Deep Learning
Acknowledgements
The authors are grateful to Delhi Public School and Department of Chemical Engineering, School of Energy Technology, Pandit Deendayal Energy University for the permission to publish this research.
Funding
Not Applicable.
Author information
Authors and Affiliations
Contributions
All the authors make a substantial contribution to this manuscript. DS and MS participated in drafting the manuscript. DS and MS wrote the main manuscript. All the authors discussed the results and implication on the manuscript at all stages.
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no competing interests.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Sheth, D., Shah, M. Predicting stock market using machine learning: best and accurate way to know future stock prices. Int J Syst Assur Eng Manag 14, 1–18 (2023). https://doi.org/10.1007/s13198-022-01811-1
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s13198-022-01811-1