Decision Trees for Stock-Specific Intraday Trading Rules

Summary

The document describes using decision trees to generate intraday trading rules for individual equities in the NIFTY50 index. Rather than applying one trader-designed combination of technical indicators across all stocks, the method seeks stock-specific rules learned from existing indicators. Each stock's generated rules are then assessed through backtesting to decide whether they merit use.

The reported comparison is with simple buy-and-hold: the paper says the decision-tree strategies outperform that benchmark for many stocks, while acknowledging that results do not hold for every stock. This supports stock-by-stock evaluation rather than assuming a universal rule set. The excerpt does not specify the indicators, training and test design, transaction costs, or performance measures, so it is not enough to judge robustness or live-trading viability.

Key ideas

• Decision trees can turn existing technical indicators into intraday rules tailored to individual equities.
• The method contrasts learned stock-specific rules with fixed indicator combinations designed by a trader.
• The proposed workflow backtests rules separately for each stock before deciding whether to use them.
• The reported results beat buy-and-hold for many stocks, but not universally.
• The excerpt does not provide enough detail to assess costs or out-of-sample robustness.

Tags

# Decision Trees for Intuitive Intraday Trading Strategies


# Decision Trees for Intuitive Intraday Trading Strategies









This research paper aims to investigate the efficacy of decision trees in constructing intraday trading strategies using existing technical indicators for individual equities in the NIFTY50 index. Unlike conventional methods that rely on a fixed set of rules based on combinations of technical indicators developed by a human trader through their analysis, the proposed approach leverages decision trees to create unique trading rules for each stock, potentially enhancing trading performance and saving time. By extensively backtesting the strategy for each stock, a trader can determine whether to employ the rules generated by the decision tree for that specific stock. While this method does not guarantee success for every stock, decision treebased strategies outperform the simple buy-and-hold strategy for many stocks. The results highlight the proficiency of decision trees as a valuable tool for enhancing intraday trading performance on a stock-by-stock basis and could be of interest to traders seeking to improve their trading strategies.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.