AI-Enabled Crypto Trading
Machine Learning and AI are being introduced to help cryptocurrency traders. Reportedly, this technology works on a pre-programmed function that makes instant buy/sell decisions at a rapid pace. This is highly required in today’s environment where the trader is prone to commit errors due to his or her emotional influence or other psychological factors affecting their trade. We will see how blockchain-based development could help in making a near perfect trade and save money for the investor.
Extremely Volatile Cryptocurrency Trading
Cryptocurrency trading is extremely volatile, but that also rewards the trader heavily and can even makes him/her rich instantly. There’s a saying: “If you can’t handle my 20% drop, you don’t deserve my 600% gain“. So, traders need to digest the drop in price to make humongous gains. However, the hard truth is that most traders don’t handle the trade properly due to their instant and poor decisions arising out of human emotions.
They make errors in this extremely volatile cryptocurrency trading, which can and has caused them to lose a lot of money. There is also a report of a person who held 200 bitcoins and ended up with no bitcoins due to very poor decisions in trading, driven mostly by his emotions.
Some argue that holding is the best strategy, but still there are many people who only want to “Buy low and Sell high”. As most crypto traders are aware, it is not easy to know the exact top and bottom, and traders lose a lot of money to trades performed out of haste and emotions.
Financial Institutions using AI
Financial institutions and investment funds have already started using Artificial Intelligence to try to gain a strategic edge in making trades and generating profits. They have very large amounts of data, provided by the global financial markets, that can help in creating the datasets. These datasets are then interpreted by the machine learning algorithms to automate the trade. This helps in high-frequency trading that can (potentially) perform buy/sell decisions based on the predefined programs. This has reportedly helped in making better and quicker decisions, which is vital in trading to maximize profits.
Machine Learning in Blockchain
Blockchain-based cryptocurrencies provide a high level of transparency, and this transparency can provide an enormous amount of data required by AI and Machine Learning. This is the perfect place for deploying AI and Machine learning algorithms. Blockchain contains the data and by deploying pre-programmed algorithms on the data, the trader can benefit by allowing AI to make the trading decisions, instead of making errors in judgement due to erratic human emotions.
Signals is one such AI tool that works on blockchain technology. Signals combines different types of information into a single platform, and helps traders build their own customized system of decision making. AI requires a huge amount of computational power and that is provided by the distributed power of the blockchain. The distributed computational power combines together to provide super-computer level capabilities, enabling machine learning algorithms to interpret the dataset and make the right decisions for the trader.
Daneel Assistant Company is another company that helps in crypto trading using AI. They use IBM’s Watson (Most Powerful AI tool) to make the right decisions using data intelligence. Daneel literally acts like a personal assistant that advises the trader on the strategy after doing thorough research on sentiment, data, emotion, and language. The tool also understands the different “Feel” of the market like FOMO, FUD or REKT to make the right trading decisions. It even captures and analyzes data from all sorts of media and social networks to come up with reliable information.
There are many other AI bots in the market, but the above mentioned are the most powerful and useful algorithms that help in doing perfect trading.
Machines Ignore Emotions
Machines ignore emotions and do the trading purely on numbers and process humongous amount of datasets that human beings cannot. Another advantage of deep machine learning is that winning strategic patterns can be identified by the AI and it can, in turn, monetize the users through winning strategies and tokens. This is also built directly into the system. So, it has another major advantage of identifying the strategic pattern and also rewarding the user.
Cryptocurrency Traders to benefit
Institutional investors benefited the most after the introduction of automated trading. Similarly, introducing Machine learning and AI into a blockchain will benefit the cryptocurrency trader due to the fact that blockchain is decentralized and has a huge amount of data to feed the AI. So, the cryptocurrency trader could greatly benefit by using these applications to overcome the error committed in haste and other psychological factors.
A number of people think that Artificial Intelligence will play an important and useful role in many aspects of our lives in the near future. It could even help crypto enthusiasts perform better trades.