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Article

Algorithmic Trading System with Adaptive State Model of a Binary-Temporal Representation

by
Michal Dominik Stasiak
Department of Investment and Real Estate, Poznań University of Economics and Business, al. Niepodleglosci 10, 61-875 Poznań, Poland
Risks 2025, 13(8), 148; https://doi.org/10.3390/risks13080148
Submission received: 12 July 2025 / Revised: 27 July 2025 / Accepted: 31 July 2025 / Published: 4 August 2025
(This article belongs to the Special Issue Advances in Risk Models and Actuarial Science)

Abstract

In this paper a new state model is introduced, an adaptative state model in a binary temporal representation (ASMBRT) as well as its application in constructing an algorithmic trading system. The presented model uses the binary temporal representation, which allows for a precise analysis of exchange rates without losing any informative value of the data. The basis of the model is the trajectory analysis for the ensuing changes in price quotations and dependencies between the duration of each change. The main advantage of the model is to eliminate the threshold analysis, used in existing state models. This solution allows for a more accurate identification of investor behavior patterns, which translates into a reduction of investment risk. In order to verify obtained results in practice, the paper presents a concept of creating an algorithmic trading system and an analysis of its financial effectiveness for the exchange rate most popular among investors, namely EUR/USD.
Keywords: state modelling; investment risk; investment decision support; algorithmic trading state modelling; investment risk; investment decision support; algorithmic trading

Share and Cite

MDPI and ACS Style

Stasiak, M.D. Algorithmic Trading System with Adaptive State Model of a Binary-Temporal Representation. Risks 2025, 13, 148. https://doi.org/10.3390/risks13080148

AMA Style

Stasiak MD. Algorithmic Trading System with Adaptive State Model of a Binary-Temporal Representation. Risks. 2025; 13(8):148. https://doi.org/10.3390/risks13080148

Chicago/Turabian Style

Stasiak, Michal Dominik. 2025. "Algorithmic Trading System with Adaptive State Model of a Binary-Temporal Representation" Risks 13, no. 8: 148. https://doi.org/10.3390/risks13080148

APA Style

Stasiak, M. D. (2025). Algorithmic Trading System with Adaptive State Model of a Binary-Temporal Representation. Risks, 13(8), 148. https://doi.org/10.3390/risks13080148

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