Papers › Exploring the Advantages of Transformers for High-Frequency Trading

Exploring the Advantages of Transformers for High-Frequency Trading

20 Feb 2023arXiv:2302.13850archive 2025-07-28

Fazl Barez, Paul Bilokon, Arthur Gervais, Nikita Lisitsyn

This paper explores the novel deep learning Transformers architectures for high-frequency Bitcoin-USDT log-return forecasting and compares them to the traditional Long Short-Term Memory models. A hybrid Transformer model, called \textbf{HFformer}, is then introduced for time series forecasting which incorporates a Transformer encoder, linear decoder, spiking activations, and quantile loss function, and does not use position encoding. Furthermore, possible high-frequency trading strategies for use with the HFformer model are discussed, including trade sizing, trading signal aggregation, and minimal trading threshold. Ultimately, the performance of the HFformer and Long Short-Term Memory models are assessed and results indicate that the HFformer achieves a higher cumulative PnL than the LSTM when trading with multiple signals during backtesting.

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DecoderTime SeriesTime Series AnalysisTime Series ForecastingVocal Bursts Intensity Prediction

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Absolute Position EncodingsAdamAttentionBPEDense ConnectionsDropoutLSTMLabel SmoothingLayer NormalizationLinear LayerMulti-Head AttentionPosition-Wise Feed-Forward LayerResidual ConnectionSigmoid ActivationSoftmaxTanh ActivationTransformer

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