A novel fuzzy document-based information retrieval scheme (FDIRS)

Abstract

BackgroundPrediction or forecasting is both an art as well as science. The process and outcome of forecasting have long been a matter of research and still are in its childhood state. We can devise numerous ways of modeling a phenomenon and predict its outcome, but there are no universal methods using which we can model every phenomena. Modeling of linear systems is comparatively simpler than dynamical systems. Stock markets are completely chaotic and dynamic systems which are both time and sentiment driven. The time series generated through stock market data can only represent a financial time series of prices but cannot represent the overall sentiment of the market players who trade and invest in the stock markets. Hence modeling of stock market data is one of the toughest as it should incorporate not only data but market sentiment also. The stock market data are a series of prices that are observed in a series of certain time intervals (minutes, hours, days, or weeks etc.). Data mining is a very effective tool using which the Abstract Information retrieval systems are generally used to find documents that are most appropriate according to some query that comes dynamically from the users. In this paper, a novel fuzzy document-based information retrieval scheme (FDIRS) is proposed for the purpose of Stock Market Index forecasting. The novelty of the proposed approach is the use of a modified tf-idf scoring scheme to predict the future trend of the stock market index. The contribution of this paper has two dimensions: (1) In the proposed system, the simple daily time series data are converted to an enriched fuzzy linguistic time series with a unique approach of incorporating information about the manner in which the OHLC (open, high, low, and close) price formation took place at every instance of the time series, and (2) A unique approach is followed while modeling the information retrieval (IR) system which converts a simple IR system into a forecasting system. The modified IR system provides us with a trend forecast and after which a crisp value is generated that becomes the forecast value that can be achieved in next few trading sessions. From the performance comparison of FDIRS with standard benchmark models, it can be affirmed that the proposed model has a potential of becoming a good forecasting model. Transaction data of CNX NIFTY-50 index of National Stock Exchange of India are used to experiment and validate the proposed model. Roy Appl Inform (2016) past behavior of the price movement can be modeled to predict the future. Fuzzy logic is a very effective tool using which the market sentiment can be captured and modeled. By adopting a hybrid approach of combining time series, data mining, and fuzzy logic, an effective system can be built to model the stock market price data that can not only give information about price but also the market sentiment or the mood of the market participants. Keywords RESEARCHThe stock market gives facilities to gain both from rising prices as well as from falling prices....

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