Book Image

Machine Learning for Finance

By : Jannes Klaas
Book Image

Machine Learning for Finance

By: Jannes Klaas

Overview of this book

Machine Learning for Finance explores new advances in machine learning and shows how they can be applied across the financial sector, including insurance, transactions, and lending. This book explains the concepts and algorithms behind the main machine learning techniques and provides example Python code for implementing the models yourself. The book is based on Jannes Klaas’ experience of running machine learning training courses for financial professionals. Rather than providing ready-made financial algorithms, the book focuses on advanced machine learning concepts and ideas that can be applied in a wide variety of ways. The book systematically explains how machine learning works on structured data, text, images, and time series. You'll cover generative adversarial learning, reinforcement learning, debugging, and launching machine learning products. Later chapters will discuss how to fight bias in machine learning. The book ends with an exploration of Bayesian inference and probabilistic programming.
Table of Contents (15 chapters)
Machine Learning for Finance
Contributors
Preface
Other Books You May Enjoy
Index

Supervised learning


Let's go back to our dog classifier. There are in fact many such classifiers currently in use today. If you use Google images, for example, and search for "dog," it will use an image classifier to show you pictures of dogs. These classifiers are trained under a paradigm known as supervised learning.

Supervised learning

In supervised learning, we have a large number of training examples, such as images of animals, and labels that describe what the expected outcome for those training examples is. For example, the preceding figure would come with the label "dog," while an image of a cat would come with a label "not a dog."

If we have a high number of these labeled training examples, we can train a classifier on detecting the subtle statistical patterns that differentiate dogs from all other animals.

Note

Note: The classifier does not know what a dog fundamentally is. It only knows the statistical patterns that linked images to dogs in training.

If a supervised learning classifier encounters something that's very different from the training data, it can often get confused and will just output nonsense.