Beyond Trend Following: Deep Learning for Market Trend Prediction
This addresses the problem of suboptimal investment strategies for asset managers, but it appears incremental as it applies existing AI/ML methods to a known domain without specifying novel breakthroughs.
The paper tackles the limitation of traditional trend-following strategies by proposing the use of AI and machine learning to predict future market trends, aiming to improve asset manager performance through increased returns and reduced drawdowns.
Trend following and momentum investing are common strategies employed by asset managers. Even though they can be helpful in the proper situations, they are limited in the sense that they work just by looking at past, as if we were driving with our focus on the rearview mirror. In this paper, we advocate for the use of Artificial Intelligence and Machine Learning techniques to predict future market trends. These predictions, when done properly, can improve the performance of asset managers by increasing returns and reducing drawdowns.