Stock prediction system using ann

IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308
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Volume: 03 Issue: 04 | Apr-2014, Available @ http://www.ijret.org 746
STOCK PREDICTION SYSTEM USING ANN
Mahesh Korade1
, Sujata Gutte2
, Asha Thorat3
, Rohini Sonawane4
1
Lecturer in Dept. of computer SITRC Nashik, University of Pune, Maharashtra, India
2
B.E.Student in Dept. of computer SITRC Nashik, University of Pune, Maharashtra, India
3
4
Abstract
Prediction of stock market returns is an important issue in finance. Artificial neural networks have been used in stock market
prediction during the last decade. Predicting anything is very hard especially if the relationship between the inputs and outputs are
non-linear in nature and stock price prediction is one of them. In this paper we have proposed stock prediction system, in this stock
price prediction using multi-layer feed forward Artificial Neural Network (ANN). In this model we have used back propagation
algorithm of ANN. As the closing price of any stock market already covers other attributes of the company, we have used historical
stock prices (closing) for training the neural network. This paper was aimed at finding the best model for the prediction of Stock
Exchange market values.
Keywords: Stock market prediction, neural network, back propagation, Client-server architecture, Neuron.
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1. INTRODUCTION
Normal human tendency is that make its life sophisticated and
easier. That's why many people research on technology which
makes its life easier. This age of modern generation, in this
new technologies are developed to solve human problem. So
one of the tremendous task is share market. It is the biggest
challenge in front of human to predict its future value because
the share market is important factor which affect business as
well as human life. Till now there are researches are done in
share market field .Like now days many web sites are
available for share market to help u ser. But that web site is
not sufficient for new user to take a decision about share.
Without any guided person he can‟t take proper decision about
share whether it sale or purchase so it may happen that the
misguidance by senior person.
So we design such a system which has intelligence like human
being. And this type of technology is called as Artificial
intelligence (AI).The artificial intelligence technology is
inspired by human neural system. The neuron in neural system
which is mainly effect in decision making .In this case neurons
work is very effective .The science is inspired by this system
and develop Artificial Neural Network (ANN) [1].
In this way the artificial neural network (ANN) is used to take
proper decision in prediction in share market. Like share
market prediction, there is whether forecasting [8]. The
weather forecasting is like share prediction .In this also, there
is huge amount of data which is in non-linear form. Since also
we can predict whether at some level .In share market, by
using fix period of interval we can predict the future value of
particular share. For that the back propagation algorithm of
ANN is used.
2. RELATED WORK
The share market is worldwide famous. In it there is large
amount investment is happen. The shareholders are investing
money in shares. Our India‟s biggest share market is in
Mumbai. And share holders are invest their money in many of
these companies. But all share holders are not always stay
there to take update about share. So from years ago, there are
some web sites are launched in market to give update to share
holder at any time where internet is available. That web site
are only give information about share market like
www.sharekhan.com.So if any new person wants to enter in
the share market then that person get information from
knowledgeable person who is working in share market. And
new person cannot take proper decision about share without
guideline of knowledgeable person. And there is no guarantee
of that person, there may be chances of misguide line and new
person is goes in loss. So there is no software/website that
helps to new user. And no one is predicting share value to help
new share holder.
Stock market prediction has always had a certain issue for
researchers. While numbers of scientific attempts have been
made on these issues, no method has been discovered to
accurately predict stock price movement [1]. The difficulty of
prediction lies in the complexities of modeling share market
dynamics. Even with a not having enough of unchanging
prediction methods, so there have been some mild successes
[6].

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One area of limited success in stock market prediction comes
from linear data. Information from quarterly reports or
breaking news stories can dramatically affect the share price
of a security. Most existing books and predicted information
on financial text mining relies on identifying a predefined set
of keywords and special way of machine learning. These
methods typically give a task weights to keywords in
proportion to the movement of a share price. These types of
analyses have shown a decided, but weak ability to predict
future event the direction of share prices. In this system we
generate share value which is very close to changes in share
market using artificial neural network and network is train by
data set [10].
We believe that combining more precise textual
representations with historical stock pricing information will
yield improved predictability results.
Fig -1: Block diagram of proposed system
The work flow of above block diagram is given below.
1. The share holder as well as company can register itself in
database.
2. The Sample database is input to stock prediction system.
Here value of share is predicted with the help of history
analysis using back propagation algorithm.
3. And predicted value of share is send to user by SMS alert
system.
4. The share holder can set threshold value in system to
automatically sale or purchase the share. For sale and perches
share, it require current rate of that share, so current rate is
input to automation.
5. a) If user want to sale particular share at particular value
only then he set the threshold value of that share in system.
As soon as the current value of share is equal to the threshold
or greater then it then automatically share is sale.
b) And if user wants to purchase the share of particular
company at particular value then he also set the value of it in
system and as soon as the current value of share is less than or
equal to the threshold value then that share is automatic
purchase. After sale and purchase of share, SMS alerts are
automatically send to user.
Algorithm:
//Problem Definition: How to predict the value of a allowance
by considering fixed period of market trend related with
allowance of specially great firm.
//Input: Sample database of company, Current Value of share.
//Output: predicted values as well as SMS alter.
Step 1: Obtain training patterns set.
Step 2: Create neural network model A: No of Input neurons,
neurons of latent layer, Output Neurons.
Step 3: Set learning rate ƞ and momentum rate α.
Step 4: Initialize all connection Wji , Wkj and bias weight θj
θk to random values.
Step 5: Set minimum error, Emin.
Step 6: Start training by applying input pattern one at a the
Layers after that calculate total error.
Step 7: Through output, hidden layer as well as adapt weight
compute back propagate error.
Step 8: Through output, input layer as well as adapt weight
compute back propagate error
Step 9: Check it Error<Emin
If not repeat Steps 6 to 9. If yes stop training.[15]
3. METHODOLOGY
To develop Stock prediction system, it requires some
parameter such as follows:
3.1 Data Set
To predict any value in any field, it required large collection
of data. By that data only system can predict its future value as
well as it required to train and validate the neural network. So
in this system, we required stock market (share market) data
which can take from Yahoo! Finance or IT or Non-IT
companies.
3.2 Data Preprocessing
The data must be prepared in a format that the neural networks
understand it. Because which data we take from various
stream that is in non-linear format which is not directly
understand by neural network. The performance of neural
network is depends on quality of data, therefore data which is
fed into the network that must be in well known format of

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network. For that we remove unwanted data from non linear
data and then normalized it in range -1 to 1 using min-max
normalization technique. Then data is in normalized form
which can be fed into the network. After getting output, the
output is also in normalized form. So to get actual output, the
output is demoralized. To train network, the whole data is
categorized into 3 subset: Set of training data, set of validating
data, and set of testing data.
3.3 Creation of Neural Network and Training
The neural network is created by input layer, hidden layer and
output layer. And also neural network is depending on other
parameters such as follows:
 Layers in network
 How many neurons in input layer?
 How many neurons in hidden layer?
 Rate of momentum
 Network learning rate
Initially network was created with some initial values. There
must be network is train by back propagation algorithm,
because it use to improve performance of neural network. To
train network it require data set. By that data set network get
trained and give correct output after processing input data.
4. NEURAL NETWORK
The neural network is made up of no. of neuron. The idea of
neuron is arrive from human body. The human body contains
number of neurons which contain certain information and that
information passes to one neuron to another neuron. The
information is some processing output or outside information.
In that way the ANN is work .In ANN, there are multiple
neurons, if we consider mth
and nth
neuron then mth
neuron
functioning output if pass input to nth
neuron. So the
connection weight of neuron m and n is denoted as Wmn i.e.
W is weight. [14]
Inputs Outputs
Input Hidden Output
Layer Layer Layer
Fig -2: Architecture of a feed forward MLP
In our system, the feed forward multi layer neural network is
used. The ANN is made up of layers of neurons. In this, the
first layer is input layer which is connected to the input data.
After input layer, there could be one or more than one hidden
layers called middle layer. And last layer is output layer which
gives results. In feedback network, all the connections are
toward the output layer. So the feed forward perceptron
network is as below.
m Wmn n
.
Fig -3: Perceptron neuron‟s connections.
4.1 Client-Server Architecture:
Our stock prediction system is the client server based system.
The client server based means the one system is server and
other are the client. The database of share market is located at
server and client access required data through server URL. For
example, as we access Google database through
www.google.com URL like this share market user can access
share database by using simply URL of system.
Server
……..
Client 1 Client 2 ….. Client n
Fig -4 Client-Server architecture
4.2 Back Propagation
There is found many colorful history of Back propagation.
Without any confusion, recently the most popular and
repeatedly used neural network architecture is back
propagation. The back propagation networks can learn
complicated multidimensional mapping. For computing the
necessary corrections the back propagation algorithm is used.
in the following four steps The back propagation algorithm
can completed : first one is Feed-forward computation second
is to the output layer compute Back propagation , third step is
to the hidden layer compute Back propagation, forth step is

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updates Weight. When the value of the error function has
become sufficiently small the algorithm is stopped.
Till now, hundreds of neural network type has been proposed.
Due to this neural surrounding a goal are full extent studied
and given different names and you will refer them as ANN.
Back propagation is networking itself as well as learning and
training algorithm also. This network may be feed forward or
Multi-layer perceptions (MLPs). Common method of training
artificial neural network is an abbreviation for “back
propagation”. Back propagation is supervised learning
method. Back propagation requires set of data of output for „n‟
no. of inputs and then making the training set. For simple
pattern recognition and mapping back propagation networks
are ideal. In training there is given algorithm examples of what
require doing and it changes the network‟s weight. That‟s why
when training is finished, for a particular input it will give you
the required output [6].
Suppose in network x is a single real input and f is network
function. Then derivative of F(x) is computed in two phases
Feed-forward and Back propagation. Feed-forward: into the
network the input x is fed. Using this function derivatives are
evaluated at every node. Evaluated derivatives are stored.
Back propagation: at the output unit the constant 1 is fed and
run network in backward direction. All Incoming information
is stored and multiplied the value which is stored in the left
part of unit. After that the result is propagate to the left part of
the unit. Then at the input unit the result is collected.
4.3 Testing and Training
Using this system user can predict future value of share. User
can set automation for buy or sale the share. For the prediction
and automation there is need of company database. Main
purpose of this system implementation is prediction. For this
first of all given database as a input to the prediction system
and input data are must be valid. Because of analysis database
system computes the result. if input data are not valid then
system cant compute correct result. That‟s why validity of
data is check first and after that valid data are given as an
input to the system. For result processing are done on input
database. Shareholder decides that which share they want to
purchase or sale. User can purchase share of any company
whose shares are available in market. And also shareholder
decides how many share wants to sale. The automation
function is used for automatically sale or purchase share. For
example: one shareholder wants to purchase share of Tata
company. Then shareholder can set value of no of share they
want to purchase and rate of share. And suppose some other
shareholder wants to sale the share of Tata company then he
set how many share he want to sale and rate of share. Rate of
share are continuously changed. Values of share are set by
admin so it is centralized process. Admin set value of share
and at that time if both value are match i.e. rate of share and
no of shares then automatically share is buy or sale share[12].
For knowing future value of share prediction function is
available. Prediction is computing by analysis history of
database. Back propagation is used for prediction. Shareholder
set the value of from how many days they want prediction.
Input is given to prediction system by share owner. In back
propagation there is used last value of share at everyday and
calculates difference between these value of share after that
calculate average and this average are add into current value
of share value. After addition getting answer is set as
prediction value. Thus predict future value of share [12].
5. CONCLUSIONS
In this paper we use artificial neural network (ANN) to predict
the value of stock share in the next day using the previous
history of data about stock market value. The resultant value
show that predicting the direction of changes of share values
in the next day. In this system we used feed forward MLP
neural network predicts the direction of the changes correctly;
the amount of change is very close to real share value. In
future works, we are going to apply other recently proposed
regression method which is newer in the field of machine
learning researches e.g. Support Vector Regression model and
claimed to have good generalization ability due to application
of large margin concept.
ACKNOWLEDGEMENTS
We are thankful to our Principal Dr. S.T. Gandhe, whose time
to time help and valuable guidance gave us high moral
support. We would also like to sincerely thank our Co-
coordinator of Computer Department Prof. Sandip Walunj for
his guidance and constant encouragement. We are also
grateful to Prof. Mahesh Korade and Prof. Monika Deshmukh
for their encouraging guidance. We are highly obliged to the
entire staff of the Computer department and our friend for
their kind cooperation and help.
REFERENCES
[1]. Chen An-Sing, Leung Mark, Daouk Hazem, “Application
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[3]. Qing Cao, Leggio Karyl, Marc Schniederjans, ”A
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[4]. Olson Dennis, Mossman Charles,“Neural Network
Forecasts of Canadian Stock Returns Using Accounting
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[5]. C.W.J. Granger and A.P. Anderson, “An Introduction to
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BIOGRAPHIES
Prof Mahesh Korde, Author is currently an assistant professor
at the Department of Computer Science and Engineering at the
University of Pune. His recent work has been in the areas of
Advance Database, Software testing and quality assurances.
Author is currently a B.E. final year student at
the Department of Computer Science and
Engineering at the University of Pune. His recent
work has been in the areas of Artificial Neural
Network.
Author is currently a B.E. final year student at
the Department of Computer Science and
Engineering at the University of Pune. His
recent work has been in the areas of Artificial
Neural Network.
Author is currently a B.E. final year student at the Department
of Computer Science and Engineering at the University of
Pune. His recent work has been in the areas of Artificial
Neural Network.

Stock prediction system using ann

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Stock prediction system using ann