Member-only story
Stock Market Price Prediction Using Monte Carlo Simulation
My attempt to predict the stock market future price using Monte Carlo simulation and the Python programming language.
Disclaimer: The material in this article is purely educational and should not be taken as professional investment advice. Invest at your own discretion. Some external links in this post are affiliated.
In this article, I will show you how I attempted to predict the stock market future price using Monte Carlo simulation and the Python programming language! To do this, I used data from the Vanguard S&P 500 ETF (VOO), which tracks the performance of the S&P 500 index. According to thebalance.com, “the S&P 500 is a stock market index that tracks the stocks of 500 large-cap U.S. companies. It represents the stock market’s performance by reporting the risks and returns of the biggest companies. Investors use it as the benchmark of the overall market, to which all other investments are compared.” But first, let’s talk a little bit about Monte Carlo simulation.
What Is Monte Carlo Simulation?
Monte Carlo simulation is a statistical technique that allows you to account for uncertainty in your predictions. It involves running multiple simulations to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables.
If you prefer not to read this article and would like a video representation of it, you can check out the YouTube video below. It goes through everything in this article with a little more detail and will help make it easy for you to start programming the code even if you don’t have the Python programming language installed on your computer. Or you can use both the article and the video as supplementary materials for learning! The entire code and the logic behind the code are written or talked about in the video. But I did add one line of code in this article that isn’t in the video that may help :). Now that all of that is out of the way, let’s begin!
