Forecast is difficult due to many uncontrollable factors. Research papers are available for stock market forecasting models.

Dear Dharmesh,

Chartists have long been interested in the pattern of past prices. They look for gaps, flags, triangles, wedges, resistance lines, reflecting barriers, head-and-shoulder and other such shapes.

Working (1934) and Kendall (1953), proposed that a random mechanism such as the roulette wheel will explain the probable outcome of the market. This idea was developed into the famous Random Walk model, along with ARIMA models, and models with Brownian motion and martingale kind of behavior.

Later, Autoregressive conditional heteroscedasticity (ARCH) model was added to treat volatility. Which was accompanied by GARCH, EGARCH, IGARCH and Fractionally Integrated GARCH (FIGARCH or FIEGARCH) models. The old idea that distribution have fat-tails made their way into forecasting by way of a Generalized Error Distribution (GED).

Other developments include smooth transition autoregressive (STAR), logistic STAR models (LSTAR), Artificial neural network (ANN), Autoregressive conditional duration (ACD).

It is certain that forecasters are still working on predicting the stock market and other financial variables.

Dear Lall and Ajit

Thanks for valuable feed

It is surely unpredictable in the short run, because the stock price follows a "random walk" - a geometric Brownian motion or other sorts of stochastic processes. But in the long run, it can be predictable and maybe forecasting would be possible (the latter is under debate, though).

(But now, it is rather computers - not people - that do the job in the stock market! And I don't know the implication of increasing intelligence of computers for the future of our forecasting).

Hope this helps,

Mizuki

Thank a lot Mizuki

Dear Fwaz

Thanks for valuable input.

regards

It is often said that a stock market is unpredictable because the index follows a random walk. In a pure random walk successive price movements are uncorrelated but I have found occasions where such correlation exists, making prices predictable to some extent in the short run. However, such prediction may not be sufficiently precise as to offer low risk opportunities for profitable trading.

Stock price movements are determined by a multiplicity of fundamental, technical and psychological factors, making it difficult to forecast with mathematical certainty. However, difficulty in predictability is not tantamount to impossibility of prediction. Several models and technical indicators have been developed over time for predicting stock prices and indexes. There is ample room for improvement. For practical purposes, the results from these models should be substantiated by fundamental factors in order to make an informed buy, hold or sell investment decision.

The hallmark of the random walk hypothesis and especially EMH is that they depend on the existence of sufficient number of well trained market analysts who are actively seeking for mid-priced assets (market inefficiency) to remain valid. That is, if everyone believes in EMH and market efficiency, inefficiency will set or at least will last longer than necessary. Many thanks to the price equilibrating activities of forecasters and arbitrageurs.!

*mispriced

If you realise that when you are forecasting the electronic stock market (that takes spacextime) everyone else is trying to do so also, the answer becomes systemic and very complex in the face of bounded rationality of realtime human players. You can see www.econometricsociety.org/[email protected] for some references.

Soumitra K Mallick

for Soumitra K. Mallick, Nick Hamburger, Sandipan Mallick

Thanks to all for valuable feed

If it would be impossible to forecast the market then there should not be any professional trader. For your surprise, i myself was working as a professional trader for almost 7 years and was consistently making profit for the firm.

You can simply google to find out professional trading firms near you and can visit and interview traders over there.

Now back to question : Yes it is possible to forecast the stock market or any other financial market with certain possibility (not 100%), during my trading experience i have used a lot of trading techniques , tools ( like technical analysis, etc) for forecasting purpose.

You can read my following papers to get some details about profitability of forecasting

Article The Profitability of Five Popular Variations of Moving Avera...

Article Technical Analysis of Indian Financial Market with the Help ...

Article Profitability of Oscillators Used in Technical Analysis for ...

Note : You can contact me anytime if need any help. I am open for collaboration in research related to Stock Market, Islamic Finance, Islamic Banking , Stock Trading , etc.