Free Resources to Learn Machine Learning for Trading

6 min read

By Chainika Thakar

Machine learning is a need in almost every sector today. Sectors like medicine, transportation, healthcare, advertising and financial technology are tremendously reliant on machine learning. Speaking about the financial technology domain, algorithmic trading practice is extremely efficient with the machine learning algorithms. There are various resources available to learn machine learning for trading, but this article aims to make the free resources to learn Machine Learning for Trading accessible to you. These free resources are divided into the following categories to make the navigation easier:


Courses

Introduction to Machine Learning for Trading

This free course is perfect for beginners in using machine learning for trading. The course helps you learn how the machine learning algorithms are implemented on financial markets data. Learn to make robust predictive models for algorithmic trading practice with this course. After completing this course, you will have in-depth knowledge of the concepts of machine learning for trading.

Machine Learning for Trading

This course introduces students to the real world challenges of implementing machine learning based trading strategies including the algorithmic steps which range from information gathering to market orders. The focus is on how to apply machine learning concepts to trading decisions.

Regression-Based Machine Learning for Algorithmic Trading

This course helps students learn to develop investment strategies using regression based techniques of machine learning. By covering advanced topics such as Kalman Filter, Lasso and Ridge, this course aims to provide in-depth learning.


E-Books

How to trade using machine learning?, by Quantra

This eBook contains all the information, right from explaining the basics and working of artificial neural networks, to demonstrating the code to implement it in Python for stock price prediction.

Interpretable Machine Learning, by Christoph Molnar

This book focuses on helping the readers learn the machine learning models for tabular data. In order to learn machine learning for trading, this book will help acquire the knowledge of relational or structured data which is one of the important concepts while trading using machine learning.

Fighting Churn with Data, by Tien Tzuo, Founder and CEO, Zuora

This machine learning book is meant for data analysts and data scientists who are the integral part of algorithmic trading. Chapter 9 of the book covers the concept of backtesting which is useful in algorithmic trading. Also, it covers the XGBoost machine learning model and cross validation technique.

Learning From Data, by Yaser S. Abu-Mostafa, Malik Magdon-Ismail, Hsuan-Tien Lin

This book provides the reader with a complete introduction to machine learning, the technology that enables computational systems to adaptively improve their performance with experience accumulated from the observed data. Such techniques are widely applied in engineering, science, finance, and commerce. Chapter 5 of this book touches upon the application of machine learning in trading.

Also, there are ipython notebooks which are continually updated to include latest resources on popular machine learning topics that are very helpful to both beginners as well as experienced data scientists.


Blogs

Quantinsti

Quantinsti offers you a range of machine learning for trading blogs such as Trading Using Machine Learning in Python, Artificial Intelligence & Machine Learning in Trading and Artificial Intelligence And Stock Markets. You can find out which blog suits you depending on your level of expertise in machine learning.

Towards data science

Here, you will find blogs such as Building RNN, LSTM, and GRU for time series using PyTorch, Deep reinforcement learning for automated stock trading and tips from an author whose machine learning trading algorithm outperformed the SP500 For 10 years.

Quantocracy

Quantocracy is a place where you can find a number of blogs on machine learning coming from different sources. They offer the user with a mashup of the most informative blogs on their website such as Metalabeling and the duality between cross-sectional and time-series factors [E.P. Chan] and Different methods for mitigating overfitting on Neural Networks.

Quantstart

Quantstart has articles such as Beginner's Guide to Statistical Machine Learning and K-Means Clustering of Daily OHLC Bar Data that will help you with the application of machine learning in trading.

Medium

Blog articles such as Big Data in Algorithmic Trading and various blogs on regression analysis offer you the information regarding such concepts like data, regression etc. used in trading. Find out more such blogs on the website.

KPMG

KPMG (a multinational organization) caters to the needs of being informed and educated with their blog articles. The blog page on the website consists of a whole lot of information on the use of machine learning for algorithmic trading.


Research papers

Machine Learning Methods in Algorithmic Trading Strategy Optimization – Design and Time Efficiency

The aim of this research paper is to create and analyse the machine learning methods for trading. The methods here help solve the most important problems, such as the sensitivity of a strategy performance to little parameter changes. For instance, a sudden shift in the market trend is the change and strategy performance will be sensitive to it. But, with the machine learning methods here, the impact on the quality of strategy should not be huge. Hence, you get shortening of the computation time, without a substantial loss of strategy quality.

Machine learning for algorithmic trading

This paper by ResearchGate examines the theoretical and practical aspects of implementation of neural network in trading (a part of machine learning). The study suggests that high-precision forecasts and correct selection of parameters help to build favorable trading strategies.

Scalable Nearest Neighbor Algorithms for High Dimensional Data

In this research paper, some advanced algorithms have been proposed. The distributed nearest neighbor framework here implies a significant help with the large data sets which would otherwise not fit in the memory of a machine. This is highly useful for backtesting in case of algorithmic trading using machine learning.

An Empirical Study of Machine Learning Algorithms for Stock Daily Trading Strategy

Recently, the researchers focus on adopting machine learning (ML) algorithms to predict stock price trends. In this paper, evaluation of various ML algorithms is done and daily trading performance of stocks under transaction cost and no transaction cost is observed. Moreover, large datasets are taken into account in this research paper to help with analysis from longer backtesting time periods (historical).

The virtue of simplicity: On machine learning models in algorithmic trading

This paper examines how to manage model complexity in the process of devising trading algorithms using machine learning. The study contributes to social studies of finance research on the human–model interplay and uses it for creating machine learning model.

An Application of Deep Reinforcement Learning to Algorithmic Trading

This scientific research paper presents an innovative approach based on deep reinforcement learning (DRL) to solve the algorithmic trading problem of determining the optimal trading position at any point in time during a trading activity in stock markets. It proposes a novel DRL trading strategy so as to maximise the resulting Sharpe ratio performance (an indicator) on a broad range of stock markets.

A Simple Way to Prevent Neural Networks from Overfitting

The research paper suggests randomly dropping the units (along with their connections) from the neural network during training. This process of dropping units significantly reduces overfitting. This  can help you to prevent overfitting in trading data that leads to building a less effective strategy. Also, major improvements happen over other regularization methods while using data for historical analysis in trading.


Videos

This video goes to the main point of introduction to machine learning for traders. It explains everything from basics of machine learning to implementation of machine learning in trading. Watch this video to get a good insight into machine learning for trading:

This video brings to you a one hour webinar in which Mr. Tad Slaff, CEO of Inovance has covered strategy development applications as well as about building a live trading strategy. Take a look at the video here:

  • Machine Learning for Algorithmic Trading

There are 2 parts to the video here. The videos by Quant News are informative for algorithmic trading with the help of machine learning. In these video, you will see a step-by-step introductory process for implementing machine learning and how you can use machine learning algorithms for trading using Python.

Also, in these videos you will learn the process of tuning your parameters for better performance of your trading system. In part 2 you will learn how to select the most important features to extract and clean your data.

Machine Learning for Algorithmic Trading | Part 1: Machine Learning & First Steps

Machine Learning for Algorithmic Trading | Part 2 Preparing Data and Training

Along with the do’s and don'ts in the application of machine learning for trading, this video describes a systematic approach to applying Machine Learning techniques to solve trading problems. This is not a tutorial on machine learning, but on how to adapt common ML techniques to develop profitable strategies.

In this video, Jenia (an algorithmic trader) used machine learning tools to write his trading algorithm that now trades an initial $1M investment. He is talking about his approach and his main learnings. Jenia's algorithm currently has a live Sharpe Ratio of 2.66

This podcast offers you a comprehensive knowledge on predicting the profitability of trades using machine learning. This podcast video covers many aspects of using machine learning during trading.


Conclusion

There are a lot of informative sources on machine learning for trading online. The best are researched and made accessible in this blog. Moreover, it is very much possible to find informative sources free of cost!

If you are interested in learning Machine Learning and its applications in trading, here's a highly-recommended track from Quantra - Learning Track: Machine Learning & Deep Learning in Financial Markets.

Perfect for beginners and experts, if you consider machine learning as an important part of the future in financial markets, you can't afford to miss this specialization.

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