When it comes to predicting asset prices in financial markets, the effectiveness of machine learning models can vary based on the prediction time horizon. In this section, we’ll explore the factors that influence the success of machine learning models in both short-term and long-term predictions.

Machine learning models in trading recognize the probabilistic nature of predicting asset prices. Even models with modest accuracy, around 55% to 60%, can provide valuable insights and contribute to profitable trading strategies. By understanding the inherent uncertainty in financial markets, machine learning models can generate probabilistic predictions that guide trading decisions.

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