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Cellular automata: a decision support system for stock market trading

Author

Listed:
  • Tessy Mathew
  • U. Srinivasa Rao
  • L. Jeganathan

Abstract

This study focuses on the implementation of moving average technical indicator on a one dimensional cellular automata. The moving average is an indicator that shows the average price of a security at a given period of time and it is the oldest and most widely used technical analysis tool. Each cell in the automata compares the relationship between moving averages of the security's price with the security price itself. During the simulation each cell in the automata produces two output states either BUY or SELL, that will help the traders to take better decision on stocks. A Buy signal is generated by the cellular automata when the security price rises above its moving average, and a Sell signal is generated when the security price falls below its moving average.

Suggested Citation

  • Tessy Mathew & U. Srinivasa Rao & L. Jeganathan, 2016. "Cellular automata: a decision support system for stock market trading," International Journal of Computational Economics and Econometrics, Inderscience Enterprises Ltd, vol. 6(4), pages 366-378.
    • Handle: RePEc:ids:ijcome:v:6:y:2016:i:4:p:366-378
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