Question

1. Explain in simple terms the algorithm used by neural networks.

Answer 1

A neural network refers to the algorithmic series that aims to recognize the underlying relationship in the data set via the process that imitates the manner human brain works.

The neural network is the system of artificial or natural neurons that can adapt to the varying inputs or data so it can generate the most suitable and best result without any external assistance. The neural networks are becoming very useful in the trading system due to advancements in artificial intelligence-based technology.

Fundamentals of neural networks:

In the finance world, the neural network provides assistance in the development of the many processes such as time series forecasting, credit risk modeling, security classification, and algorithmic trading generating the price derivatives and proprietary indicators.

It contains the interconnected multiple layers of the nodes. Every node is like perception and it is like multiple linear regression.

Application of neural network:

Due to technological advancement, it is widely used in a wide range of fields such as finance, trading, operating, business, and product maintenance. It has become an integral part of business applications such as forecasting and market research, risk assessments, and fraud detection.