Research On The Application Of Quantitative Trading Strategy Based On Trend Theory In Foreign Exchange Market

For the traditional manual foreign exchange trading system, the traders not only stare at the market consuming much physical energy, but also miss some chances caused by the personal emotional factors. With the development of artificial intelligence, traders can make use of neural networks, data mining and other intelligent algorithm to train optimal trading strategy, to generate a more rational quantitative program trading system which is not affected by personal factors.There are two main analysis methods in currency market, which are fundamental analysis and technical analysis. Fundamental analysis mainly considers the financial, political theory and economic indicators, and determines the tendency by judging supply and demand factors. Technical analysis theory is the study of market trading behavior, including the widely used theory tendency theory. With decades of rapid development, quantitative trading has become the main trading pattern of professional investors around the global financial markets. Quantitative investment compared with the traditional subjective judgment of trading has one advantage whose performance rewards verifiability and traceability can be checked through the history mass data to test whether the quantitative system is operational and can generate much revenue.This paper first identifies the existing theories on investments analyses and compares the main streams of the popular investment analysis methods, including technical analysis, fundamental analysis and quantitative investment analysis method, in order to illustrate the current condition of the currency markets. Given the characteristics of the foreign exchange market, we then build the quantitative trading model based on trend theory. Furthermore, we validate our model with the historical data of euro currency against dollar currency. The result demonstrates our model manifests high accuracy and low risk in the foreign exchange market compared with the performance of the existing models in the literature.