Question

Data mining is often used to find patterns in stock prices to assist technical financial stock market analysts, or in commodities or currency trading. what are the benefits and concerns with using data mining to find patterns in stock prices? what would you need to feel comfortable enough to trade on these patterns?

Answer 1

Data mining is a technique where the analysts examine the previous trends in the market and make decisions as to the future trend of the market.

1. The benefits of data mining are, it is very easy, even a software can do the task for analysts. It is very cheap also requiring less input for its processing.
2. The only concern is that, the market may behave irrespective of the trends at times, because of some of the conditions in the politics, economics, which are not taken into consideration by the data mining.

I don't think this technique provides me 100% guarantee to proceed with trading, will also take into consideration, various other factors as well.