Modeling the behavior of investors in the financial market

Abstract

Background. Dynamics, large volumes of investment and the potential of future development specify the necessity to determine the place of BO&KC in the global financial system and conduction of system analysis of the relevant markets. Improvement of trading results is achieved by forecasting financial instrument prices that allows obtaining yield higher than the market one on a significant investment distance with the same level of risk. Therefore, there is an acute need for the study of the problem of BO&KC market forecasting and the creation of modern techniques of their prediction.
The main aim of the research is a systematic analysis of markets BO&KC according to their degree of predictability, the comparability of existing models of stock markets, investment technologies optimization in the presence of arbitrage situations.
The analysis of the latest research and publications. Economists’ thoughts on opportunities and principles of prediction of these markets differ significantly and are concentrated relatively to selected concepts of analysis. A statement that in prices the market fully accumulates information concerning FI and related assets, including predictive information regarding the behavior of this asset, and reacts to it almost instantly is predominant. At present there is no consensus of scientists concerning predictability of financial markets and, accordingly, the generally accepted theory. Therefore, the problems of predictability on VRFR can’t be resolved by direct analogies of theories of stock markets and require a separate study.
Materials and methods. The results of bidding on such recognized global markets BO&KS as Betfair and Pinnacle became the information base for the research. Methods of system analysis, mathematical statistics and theory of probabilities are used for the simulation of high-risk financial markets.
Results. Obviously, making profit on VRFR is only possible by sale or resale of contracts for sale of forecasts. High-risk financial markets, based on financial instruments in the form of contracts for the rates, were analyzed concerning various capitalized events, their preconditions, peculiarities of the application of arbitration technique, prediction of financial instrument prices, matching capabilities with existing models of effective, coherent and fractal markets.
The conducted study gives grounds to consider FI BO&KS as separate, fifth floor of the modern financial system. The above mentioned considerations prove conclusively that the prediction of VRFR within such existing models of stock markets as EMH, FMH and CMH as a whole is not correct and is only possible on certain conditions and deadlines that require special consideration. The suggested generalized model of arbitration calculations is an effective tool of trading on VRFR can be used in a variety of econometric models and calculations.
Conclusion. Are considered high-risk financial markets based on financial instruments (FI) in the form of contracts for the different rates of capitalized events (ie events involving a sufficient number of investors and investments). Such events against other groups FI and commodity assets constitute a separate type of instrument – binary options. For these markets analyzed preconditions, especially the use of technology arbitration FI forecasting prices, the possibility of comparison with existing models of effective, coherent and fractal markets.