Crypto Trading & Investment Forecasting Using Artificial Intelligence

Are you thinking lately to make trading or investment on cryptocurrencies? However, something is hindering your goal, obviously, it is nothing but “risk”. Making a profit is the basic goal of investment or trading but the inconsistent nature of the cryptocurrencies raises huge risks. Usually, investors seek the advice of analysts and not every decision ends up in success.

Artificial intelligence can do wonders with data forecasting. Based on the past and present data, the future can be predicted. As the predictive analytics of AI purely works based on data, decision making becomes easier. Let’s see how crypto trading and investment forecasting is carried out using artificial intelligence.

From the foundation stones to the rooftop

Before submerging deep into the forecasting, let’s make one thing clear, trading & investment are basically two methods of making the profit. Investment is a long-term method of buying and holding stocks whereas trading a short-time purchase and sell method.

Why is this difference important in this context? The main reason is that the decision for investment or trading in AI is achieved using forecasting. You’ll understand the reason for mentioning the difference further down in this article.

The most necessary ingredient for forecasting - The data

What’s the first thing that comes to the trader’s mind before making a potential investment? Of course, the value of investing and then the decision in choosing the best digital currency. In normal cases, the investor has to study the entire crypto and finance universe by going through the past data, present data, and then the latest relevant news.

Over an year, the price range of Bitcoin has surged from $3000 to nearly $10000. It gives a positive sign for investment but is that it? No, the investor has to compare the data of other cryptocurrencies.

Then, through the crypto news, and other related finance news. The price of these digital currencies is volatile and constantly changing. All such possible data are analyzed, and finally, the decision time.It takes a long period of time, as mentioned earlier, analysts have an expert opinion regarding the investment, they also need to go through all the processes. The investor needs to glue his/her eyes on the real-time price list after the investment.

The tensed moments, the investor’s mind by now will be floating on the island between dreams on future profit and the scary thoughts of losing the fortune. The sleepless nights will drain the peaceful times and then & now, the investor has to check the market price or value thrice an hour or more.

The solution to the problems - AI & machine learning

Well, this hectic process can be cut short and get relief using artificial intelligence. Data related to the crypto world is fed to a system, where the machine learns and analyzes all the data. The machine accesses the data in real-time and compares it with the historic data.

Predictive analysis and demand forecasting are the next processes carried out to reach the ultimate goal - investment.

“Hello, Grace. Right now, ‘X coin’ is the best investment option for you. ‘X coin’ has been trending for the past year, here is the personalized report for you, go through it before making the investment. I’ll update you on the price chart every hour, happy investment time Grace!”

What if your personal assistant happened to assist you like the above scenario, won’t that be great? That’s the power of AI. AI uses past data and comes up with a trendline, analyzes the market, and other factors to provide a geeky idea. AI can help traders as well as investors separately.

The strategy for long-term and short-term profits vary, so, machines will be recommending the right choice based on the nature of making money. The short-term and long-term goals are thus set! The machine or system can be then integrated with a voice assistant for better user-experiences.

With voice assistants on the device, peeking over the rates can be minimized. Tasks can be assigned to these assistants like monitoring the price, notifying immediately if any price drop is observed, suggestions to make another investment, etc.

How far is AI in trading/investing forecasting reliable?

Talking about the reliability factor, machines alone cannot make the best choice or here, the decision! Human intelligence and artificial intelligence can together make wonders. The forecasting can help potential investors and traders to make smart decisions based on intelligent insights.

The combined efforts of the human brain and AI is known as hybrid intelligence! Machine learning follows an algorithm and similarly, our human brains also follow one. The skillset of these two varies, computers can beat the world’s best chess player but the emotions or perception cannot be achieved as humans do. So, the complementary abilities of human intelligence and AI can make a hybrid model.

Cindicator is using hybrid intelligence to help or advise traders to make smart trading. So far, they achieved a huge success and made effective predictive analysis for new as well as experienced traders.

These forecasting techniques are presently used in different industries, the business intelligence system in dashboards are one of the most accepted models of AI. The advanced models of hybrid intelligence will be the next big thing to witness in the future.

High-frequency trading (HFT) - Trading meets faster goals

Trading has now reached a new paradigm, and it’s far better than conventional trader methods. Traders take a broad amount of time to analyze the market and find the trend. Trading is then made based on these trends which they believe is presently followed in the market. But the major challenge they face here is that the trend has already moved on from that point to follow a new one.

In simple words, a new trend would have been already working in trading which the traders won’t recognize. The issue here is the time to analyze the trend! Powered with AI, high-frequency trading (HFT) shatters this issue.

HFT can execute a large number of orders (trading) within split seconds using a complex algorithm. Accurate finance flow for traders is easily achieved using high-frequency trading. Yes, the algorithm is a bit complex but very much executable by understanding it properly.
With AI’s predictive analytics, the system itself analyzes & then recognizes the features that will increase or decrease market value. The most important factor of HFT is the speed, trading is completed before any changes in trends.

Everything in trading on HFT is computerized, even the decision is made by the system but not humans! The Wall Street traders are super-charged with high-frequency trading.

Decentralized applications (DApps) for trading

The challenge of trading is perhaps more complex and not everyone has the necessary coding skills. What if the traders get an application that doesn’t require high analytical skills for trading? Won’t that be wonderful? Decentralized applications, also known as DApps, have a simple solution.

Autonio has developed a decentralized trading bot using AI and the traders can easily make automated trading. The process is not at all complex and they don’t need to study algorithms.
It’s an application that can be installed on the system, and after completing a few basic steps, traders are good to make the first trade.

They can enable or disable certain key indicators, choose the exchange platform, select the desired cryptocurrency, set the time interval of trading, etc. After completing, the system or bot itself starts trading and ensures high returns.

AI has thus developed enormously and applied in trading with advanced methods. Many such decentralized applications are launching day-by-day to help faster and accurate trading.

What does the future look like?

Trading and investments are going to be more accurate than ever, profit will rise, and the capabilities to build a smart world is becoming a reality! As human beings become wiser, technology will also advance through to even achieve the impossible!
What we have to hold on during these stages of development is to never lose humanity. Humanity connects us all, and it must be preserved for the next generations.

Author Bio

Dhanesh Haridas, CTO of Epixel MLM Software, has 12+ years of experience in Software Development. He is an enthusiastic business person, a perfect leader and above all a passionate writer. He is very keen on experimenting with the latest technological advancements. His areas of interest include artificial intelligence, software development, data science, blockchain technology, cryptocurrency, IoT and so on.