Neural network technology for pattern recognition, stock prediction and market forecasting

A neural network is an interconnected group of biological neurons. In modern usage the term can also refer to artificial neural networks, which are constituted of artificial neurons. Thus the term 'Neural Network' specifies two distinct concepts:

- A biological neural network is a plexus of connected or functionally related neurons in the peripheral nervous system or the central nervous system.

- In the field of neuroscience, it most often refers to a group of neurons from a nervous system that are suited for laboratory analysis.

Artificial neural networks were designed to model some properties of biological neural networks, though most of the applications are of technical nature as opposed to cognitive models. Neural networks are made of units that are often assumed to be simple in the sense that their state can be described by single numbers, their "activation" values. Each unit generates an output signal based on its activation. Units are connected to each other very specifically, each connection having an individual "weight" (again described by a single number). Each unit sends its output value to all other units to which they have an outgoing connection. Through these connections, the output of one unit can influence the activations of other units. The unit receiving the connections calculates its activation by taking a weighted sum of the input signals (i.e. it multiplies each input signal with the weight that corresponds to that connection and adds these products). The output is determined by the activation function based on this activation (e.g. the unit generates output or "fires" if the activation is above a threshold value). Networks learn by changing the weights of the connections. In general, a neural network is composed of a group or groups of physically connected or functionally associated neurons. A single neuron can be connected to many other neurons and the total number of neurons and connections in a network can be extremely large. Connections, called synapses are usually formed from axons to dendrites, though dendrodentritic microcircuits and other connections are possible. Apart from the electrical signalling, there are other forms of signaling that arise from neurotransmitter diffusion, which have an effect on electrical signaling. Thus, like other biological networks, neural networks are extremely complex.

While a detailed description of neural systems seems currently unattainable, progress is made towards a better understanding of basic mechanisms. Artificial intelligence and cognitive modeling try to simulate some properties of neural networks. While similar in their techniques, the former has the aim of solving particular tasks, while the latter aims to build mathematical models of biological neural systems. In the artificial intelligence field, artificial neural networks have been applied successfully to speech recognition, image analysis and adaptive control, in order to construct software agents (in computer and video games) or autonomous robots. Most of the currently employed artificial neural networks for artificial intelligence are based on statistical estimation, optimisation and control theory. The cognitive modelling field is the physical or mathematical modelling of the behaviour of neural systems; ranging from the individual neural level (e.g. modelling the spike response curves of neurons to a stimulus), through the neural cluster level (e.g. modelling the release and effects of dopamine in the basal ganglia) to the complete organism (e.g. behavioural modelling of the organism's response to stimuli).