Multi Classification Labeling

Algo Trading Business
1

Hi





Asume that I have a 2 Long trades that close at the same time and the second trade opens only if thers a trade open in the same direction.



If I label the opening date from the first trade as 1, the second trade as 2 and the close point as 3,  the algorithm will understand that thers a jerarquy or order from the labels or it just asume each label as independet point?





 

2

Hello Alejandro,



In order to help you, I want to ask you about your scenario:



You say: "Asume that I have a 2 Long trades that close at the same time and the second trade opens only if thers a trade open in the same direction."



I ask:



1) You're supposing that you invest only in 2 stocks? 

2) The only way a second trade would open only if there's a trade open in the same direction is when you invest in more than two stocks since you are saying that there is an existing trade with a possible same direction signal. I say this because you say previously the previous 2 long trades close at the same time. Am I understanding well?



You say: "If I label the opening date from the first trade as 1, the second trade as 2 and the close point as 3,  the algorithm will understand that thers a jerarquy or order from the labels or it just asume each label as independet point?"



I ask:


  1. You are assigning the label 1 to: The opening trade. Then you assign label 2 to a "second" trade and finally you are assigning label 3 to a close "price". I don't understand you meant with this explanation. Can you further explain what you meant please so we can help you?



    We will waiting for your response,



    Thanks



    Jose Carlos
3

José Carlos hi



Thanks for your commnets, on the next lines my answers.



Both trades are open on the same Forex Pair. EURUSD



On the next image a small example tring to clarify the actions and labels.









The question is if the Decision Tree algorithm takes into consideration the labels as numbers that have  some level of hierarchy or it just take them as independet labels.



By some level of hierarchy I mean that 2 is bigger than 1 and then the algorithm may asume that 2 is important than 1 or something like that…





Once again thanks for your help

4

Hello Alejandro,



So you're saying that one of your inputs to have the decision tree algo running is your open and close positions?



Can you explain more about what exactly you want from this input?

Why are you using your open position as input for your model?

Do you want to predict the stock price with your open and close positions?



Waiting for your response,



Thanks



Jose Carlos