Mr. Perminous KAHOME, University of Nairobi, Nairobi, Kenya.

Dr. Elisha T.O. OPIYO, SCI, University of Nairobi, Nairobi, Kenya.

Prof. William OKELLO-ODONGO, SCI, University of Nairobi, Nairobi, Kenya.

Agent application in the stock market

IntroductionThe stock market is a key market in any economy and

financial forecast such as stock price prediction is a field receiving much attention both for research studies and commercial applications.

This Research involves an agent-based model for predicting the price movement of stocks in the NSE .

It utilizes agent methodology and is developed in JADE platform.

The agents have the ability to scan the environment and consolidate the gathered information whether positive or negative thus enabling it to predict the trend of the stock prices and provide an output advice informing the traders whether to buy, sell or hold on to a stock.

Problem StatementFinancial analysts, stock brokers, individual and fund

managers who trade in the NSE lack accurate models to enable them predict future stock price. According To CMA they rely on fundamental analysis (position of company in market) and technical analysis only (charts)

Most traders and investors cannot afford expensive algorithms and software's for prediction.

OBJECTIVES:Assess the impact of using agent in stock price

predictionAssess the agent based stock price prediction

systemUse data generated from the system to evaluate

stock price prediction.Provide support for the traders at the NSE on

whether stock price is going up, volatile or down thus enable them decide to BUY, SELL or HOLD

Significance of the studyThis proposed model will enable traders at

the NSE without much complexity have a signal guide of whether the stock price will rise, fall, Volatile and thus if it’s a good to buy, sell or hold on to the stock.

The traders will thus be able to improve profitability as they are able to optimize decisions of Buy, Sell or Hold.

Related workUse of charts and candle sticks to visualize and

forecast. These are not reliable.Prediction was done using time series

forecasting. This proved inefficient and failed massively e.g. weather forecast

Artificial neural networks has also been used extensively in recent past. This has a partial success with some challenges including training the network, over fitting, black box property.

Currently use of multi agents has proved more accurate and able to predict complex interactions much more realistically.

Why Agents?With agents you use a computer to

simulate decisions of heterogeneous individual agents

Can ground with micro-data. Potentially allow rich calibration and validation.

Can model complexity of a real economy. Can include stock market, real estate, capital market, liquidity.

Is ground with behavioral knowledge. +ve effect vs –ve effects

Conceptual model

methodologyThe agent methodology to be utilized is

PASSI methodology. Due to its rich development lifecycle that spans initial requirement through deployment.

TESTINGSingle agent test was conducted to

indicate agent are working as expected and below is their communication

GUIThe stock Trend Board displaying stock

predictions

Results Discussion10 Experts in Trading were given the system to

evaluate and give a feedback on the system in the following criteria's.

System Usability –GoodSystem Functionality – excellentSystem Performance.- Above AverageFrom the tests conducted by random sample of

Expert users, the system can be incorporated into an everyday tool for stock brokers and investors to use to predict the movement of stocks rather than manually reading through all possible news articles and trying to identify the trend on their own.

CONCLUSIONMulti agents have been used in the stock and financial

services sector which is a key area in any economy. Most of Traders and stock Brokers have to read through news articles about the various stocks that are trading in order to identify factors that positively or negatively affect the stock price then they can choose a trading strategy in order to place orders or publish shares to sell.

With the use of the stock price prediction, its evident that the model is a useful tool for stockbrokers and agents and even novice traders who would then need not rely on the traditional methods to be able to identify the trend of prices at the NSE, but also have instant quick update of current trend and with pointer to what caused the trend which then makes it much easier to follow up using their individual trading strategies.

Thank You