Ques: 1.The Prediction in the tutorial is on stock market price,so can I follow this for forex as well . If not then what would be best for alignment with forex prediction?
2.For forex prediction there is OHLC(Open,High,Low ,Close and volume) data only.
But there are many factors which affect the forex price like trader’s sentiments,war’s,Inflation,elections etc? - correct? Is this only best managed with sentimental analysis?
3.can I merge the sentiment analysis and forex dataset for better accuracy? I have looked at valued research for Twitter sentiment testing that I wouls like to confirm with you
Hello Zach,
The fundamental approach to predict a contract price is the same for stocks and forex. However, the factors that affect the price of stock and forex are not the same. If you are just using technical indicators as predictor variables, i.e. price based predictor variables, the approach would be the same for stocks and forex.
However, if you are considering macroeconomic factors also as predictor variables, then you need to include the macroeconomic data that influence the forex prices.
For example, let's consider USD/JPY
The fiscal and monetary policies of the US and Japanese governments impact the interest rates and influence the USD/JPY price. Not only that, the balance of trade between the US and Japan, their respective trade deficits, GDP, inflation, employment levels, and manufacturing indices are some of the primary factors that influence the USD/JPY price.
In addition to this, the sentiment factors such as economic outlook, and interest rate outlook also influence the currency value. You can use all the above factors as predictor variables to forecast USD/JPY prices.
You can also use a public sentiment as one of the predictor variables. For example, you can also use Twitter sentiment for USD/JPY. (Keywords: USD/JPY, #USD/JPY, Dollar, #Dollar, Yen, #Yen). Hope this answers all of your queries.
Please check the following resources for more details.
1.A Sentiment Analysis of Twitter Content as a Predictor of Exchange Rate Movements
2.Economic Factors That Affect the Forex Market
3.What Indicators Are Used in Exchange Rate Forecasting?
4.Macroeconomic Factors That Influence Exchange Rate Fluctuation in ASEAN Countries
5.The effect of macroeconomic variables on the exchange rate
6.FOREX Daily Trend Prediction using Machine Learning Techniques
Thank you