It won't come as a surprise to many of the readers that modern machine learning techniques can yield significant benefit in crafting automated trading strategies. In fact, any FX trader with solid math background will agree that an automated trading strategy is itself a 'model', whether machine or human learning was used to construct it. This is why it makes sense to borrow and introduce some concepts from this popular branch of modern computer science, and discuss how they might apply to Forex trading.
For our purposes, we can define a model as follows: a mathematical function or formula that takes in a set amount of data (which can be your indicators for example) and produces an output. A trading strategy is one such model. Contrary to machine learning however, we are human learners that use trial and error to come up with a good model for trading currencies. It makes sense that we can learn a few tricks from how machines learn their models, and apply those learnings in Forex for greater return.
Learning a model, for machines, works by running a set of pattern recognition algorithms on a set of data. The data can be anything, ranging from images, music and even financial data. Th…