Banzai wrote: Thu Jan 15, 2026 5:58 am
Hidden Markov Model (HMM) trading strategy
So to practically use this for trading, we have to just look at the current slope of the prediction line as an indication of where the price is predicted to go. Is that right or is there another way to work with this? As far as I see the indicator doesn't really show me the current state of the market, if the market is trending up or down or is ranging, although in theory, that's what it is capable of doing.
Yes, you're right.
We're supposed to use a dashboard to show the probability of the uptrend or downtrend.
I just found a good HMM indicator on Tradingview:
https://www.tradingview.com/script/uvsd ... kov-Model/
I'll try to convert it later. No promise.
There are many books about HMM. We should implement more.
Best for finance & markets
Hidden Markov Models in Finance — Focuses on using HMMs in financial markets, trend/regime detection, pricing, etc.
Hidden Markov Models: Applications to Financial Economics — Applies HMMs specifically in financial economics contexts.
Introductory & practical books
Hidden Markov Models for Time Series: An Introduction Using R — Great for understanding the basics with time-series examples.
Mixture and Hidden Markov Models with R — Combines mixture models and HMMs with practical examples.
Implementation / theory
Hidden Markov Models: Theory and Implementation Using MATLAB — Focuses on theory with MATLAB implementation examples.
Hidden Markov Models: Estimation and Control — A more advanced and mathematical reference book.
Hidden Markov Models and Applications — Covers modern theoretical advances and uses.
Best for finance & markets
Introductory & practical books
Implementation / theory
Wher