Not able to understand when to buy stock for next day?

AI & Machine learning
1

Course Name: Trading with Machine Learning: Regression, Section No: 7, Unit No: 1, 

  1. How to predict high and low for next day?
  2. We sell when market high and low move, above the predicted high and low respectfully? i dont understand this sentence,when to buy? 
  3. We buy when market high and low drop, below when predicted high and low respectfully?

https://ibb.co/h7ytvsr

for clarity,i m attaching image link.

 

2

Hi Shrirang,



The answer to your questions are stated below:

 

  1. How to predict high and low for next day? - This is explained in Section 6, Unit 1 and Unit 5
For the second and third questions, here's your answer:
The most important assumption of this strategy is that the predicted "high" and "low" prices are correct. And if the actual prices deviate from the predicted prices, then this will result in market corrections.

To elaborate, if the actual high and low prices are above the predicted levels, then we are assuming that the asset is overbought, and will soon fall back to the predicted levels. On the other hand, if they are below the predicted levels, then we are assuming that the asset is oversold, and will soon rise up to the predicted levels.

Here's how you trade based on the above assumption:
Entry condition 1: Enter a short position when the actual high and low prices are above the predicted levels.
Entry condition 2: Enter a long position when the actual high and low prices are below the predicted levels.

Hope this helps!

Thanks,
Rushda Ansari