The Cryptocurrency Market
Cryptocurrency markets continue to gain more publicity and awareness among investors, businesses and entrepreneurs.
During 2017 the prices of the popular virtual currencies, such as Bitcoin, ZCash and Ethereum have reached record highs as a result of this increasing investor interest.
This has also prompted the emergence of many other Cryptocurrency options, including “alt-coins” and “app tokens.”
With just a few lines of code nearly anyone with a knowledge of coding can use a next generation open source code developed on the blockchain to release their own Cryptocurrency to the world.
Whilst the increased popularity of the Cryptocurrency market presents unprecedented trading opportunities, the corresponding increase of options is making it more difficult to identify which currency will be the next one to cause disruption.
Experts in the Cryptocurrency market are inundated by large and growing amounts of data that needs to be digested and understood to be successful.
Still in their infancy, volatile, borderless, and available 24/7 – these markets are extremely inefficient. We are yet to see a noticeable participation of institutional interest.
Having risen apace with the internet, finding information about Cryptocurrency is no problem. The challenge is deciphering unbiased sources and siphoning through the disinformation. What is the truth and what is the distraction?
If traders can efficiently apply the useful information then there are significant chances of generating superior returns.
Artificial intelligence, specifically neural networks used in machine learning, are designed as software that emulates the activity of the human brain and how it processes information.
These neural network models have already proved to be highly accurate when it comes to predicting future events when applied to historical data cross referenced with real time events.
As a result the technology has improved Data Science to a point where it is impressively more effective in comparison to traditional algorithms based on hard coded rules.
Machine intelligence as an evolving field, represents the largest opportunity for staying ahead in any market where competition makes innovation necessary.
The field of Artificial Intelligence is not new. Neither is investment in AI startups.
However, since 2012 the amount of capital contribution to Artificial Intelligence has been on the rise. 2016 was a record year for AI startups globally.
The chart below from CBInsights details the Annual Financing History of AI StartUps since 2016.
In short the current most popular application for AI technology is for the substitution of routine human tasks. AI is much faster, accurate and without fatigue.
Consider how an AI tool can be applied to Stock Market Trading.
News announcements impact greatly upon the prices of stocks.
The tool can compare cases where precedents were set, read financial results or analyst reports to find hidden causality between many companies’ results, mine text on Twitter to find correlation between stock price and some words, etc.
The entire process can be undertaken at incredible speed.
Artificial intelligence has been used for over 18 years in traditional financial market trading. It has proved to be a useful indicator for generating additional returns for many hedge funds and banks. This trend is set to continue.
Capable of processing and comprehending data faster than any human, the potential for both high-frequency trading and longer-term predictions based on intelligent intuitions leads to substantially greater captured profits.
A 2015 survey from PWC indicates that only 6% of Consumers say that they are “very” or “extremely” familiar with cryptocurrencies.
This is almost certainly set for a radical change in the years ahead.
Artificial Intelligence in Cryptocurrency Markets
Right now Cryptocurrency traders spend countless hours in chat groups, forums, on social media and scanning new sites. At the same time the trader must comprehend sophisticated technical analysis whilst executing trades at precisely the right moment.
An AI tool that could process all of this information and execute profitable trades at the right time would be incredibly useful. The tool would work by pairing traditional market (stocks, currencies, bonds, derivatives) trading concepts with today’s cutting-edge pattern recognition and machine learning capabilities.
The AI software can then scan, analyse, and interpret the massive amount of information available at startling speed. With this information available, the tool would then identify entry points and notify the trader about these price movements before they happen. This would allow traders to profit from these moves when they happen, instead of receiving an alert after a profit has been made.
There are solutions for this method of trading available and in development.
Here is a list of some currently available in the market:
Intelligent Trading Technologies:
Intelligent Trading Technologies (ITT) has a heavy duty platform for analysis of all relevant data for Cryptocurrencies. ITT trading bots can be customised to cater to specific user preferences for time of day, trading volumes, risk level, hold timings, among others.
In addition it will monitor all of the relevant information, 24/7 whilst automatically configuring a trading strategy and commands to execute. ITT will then send actionable trading alerts during the day and in time to make the final call whether to trade. The latest version (Q2017) is capable of self-programming and reprogramming to match changes in the market, adjusting indicator weights, and continuous optimisation as an agent motivated solely on maximising the traders hourly return rate.
Inovance is a financial services firm. Inovance developed TRAID, a trading platform for both retail and professional traders. TRAID allows traders to combine their market intuitions and experiences with machine-learning algorithms in order to consistently capitalise on new market opportunities. Traders can build, test, and deploy real-time decision support metrics or a portfolio of intelligent, fully automated trading strategies, without any programming or mathematical knowledge.
TSSB is FREE software platform for rapid R&D of statistically sound predictive model based trading systems via machine learning.
NeuroShell Trader is software for building trading systems. It is not a trading system in its own right, it is a toolkit of both
NeuroShell Trader will build trading systems for stocks, FOREX, futures, commodities, options, indexes and more. You can build trading systems for exchanges all over the world, like the NYSE, AMEX, FTSE, DAX, ASX, TSX, SFE, and many more.
The trading systems can consist of standard technical analysis indicators and rules like traders have used for years, artificial intelligence techniques like neural networks, or hybrids of both. The trading systems you build will automatically back-test, and continue to give signals into the future as new data arrives.