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Understanding Gradient Descent and Its Applications in Trading Algorithms

· 6 min read
Vadim Nicolai
Senior Software Engineer at Vitrifi

Introduction

Gradient Descent is a fundamental optimization algorithm used in machine learning and quantitative finance. In the context of algorithmic trading, it helps in optimizing predictive models, from price forecasting to portfolio optimization. Understanding how Gradient Descent works and how it can be applied in the financial markets is crucial for developing effective trading strategies.

In this article, we will explore the concept of Gradient Descent, its variations, and its applications in trading.