Are Crypto Trading bots the future for trading?

21

September

2020

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We know cryptocurrencies as an asset are volatile in nature, and most people see an advantage in this. Why? Investing at lower prices and offloading risks when markets are on the rise is great. However, as humans we need to sleep, eat and take some time out, and usually miss chances where we can earn a little extra.

However, if we can create algorithms that can automate this whole setup, we really wouldn’t miss a chance in making a profit. These are known as Crypto Trading Bots.

What are they?

Robots or bots that use algorithms to trade. It is important to note that most bots are not profitable. Bots usually generate profit and ideally this profit is greater when it is adjusted for risk, that is when your positive gains relative to your negative gains is a bit better. Over here you would choose the option which is more consistent instead of higher riskier returns.

So how do bots work?

Bots have 3 parts to its functionality

  1. Single generator: this usually helps make predictions
  2. Risk allocation: decides on how much to buy and sell
  3. Execution: executes the above by trading

These 3 functionalities have separate algorithms and optimization for the process to be completed

Bots are better than humans, right?

Bots are most consistent and monotonous compare to humans, they have an advantage with respect to speed, longevity, rationality, and capacity (space).

Do we need different algorithms to use bots?

You need 2 types of trading algorithms

  1. Momentum: This can be seen as, when prices are up, and we assume for them to continue to rise, we buy. Statistically the “win” does not often happen, but when it does its gain is quite large.
  2. Mean-reversion: over here prices are up, but we assume it’s because of a pull-back or drop in stock for a short period of time, so we sell. Statistically, winning is more common in this case, however the gain is much smaller.

But the most important question? Are bots profitable?

No!

  • All commercial bots I’ve tried lost money compared to buy and hold, no matter what settings were tried. — intertron
  • All commercial bots I’ve tried lost money compared to buy and hold, no matter what settings were tried. — intertron
  • If bots worked everyone would use them. This does not discount the private bots used by BlackRock and other massive trading firms. We will never have access to the data and teams of devs that they do. — vibrate
  • Its a good way to lose all your money….if people here don’t know what they are doing in the market I wouldn’t expect them to be able to […] set [a bot] up so it is useful. — Person51389

But the algorithms used are extremely profitable. Therefore, I believe in the near future when there is more access symmetric to information and people have more knowledge, this platform would be the most supported method of trading.

References:

https://towardsdatascience.com/crypto-trading-bots-a-helpful-guide-for-beginners-60decb40e434

https://www.reddit.com/r/BitcoinMarkets/comments/7jkc8g/anyone_have_success_with_gekko_or_other_bot/

https://www.reddit.com/r/BitcoinMarkets/comments/7jkc8g/anyone_have_success_with_gekko_or_other_bot/

https://www.reddit.com/r/CryptoCurrency/comments/aofu3z/what_are_trading_bots_in_general_are_trading_bots/

https://www.investopedia.com/terms/p/pullback.asp#:~:text=A%20pullback%20is%20a%20pause,occur%20within%20a%20continuing%20uptrend.&text=The%20term%20pullback%20is%20usually,sessions%20%2D%20before%20the%20uptrend%20resumes

Best Bitcoin and Crypto Trading Bots 2020

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The art of listening through social media

9

September

2020

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80% of the users on Twitter believe that social media really listens to our conversations. There has been an ongoing discussion of whether social media applications are listening to us. We really believe that once we talk about something, for instance: Ben & Jerry’s, we get bombarded with ads on Instagram, but do social media apps really listen to us?
In 2016, there was a controversy with Facebook, where the audience accused the company of collecting data by using the microphone. Although, this cannot be true because of privacy laws (and not to mention it is completely illegal). Social Media goes on step further and encrypts messages when they are sent so third parties cannot access or retrieve data. Think about it, if an app were to record everything you said 24/7, it would be impossible to track everything, pick out relevant information and then provide ads for it.
So then? How does our social media track us so well?
Here comes in algorithms and digital marketing. Social media developers are more efficient and instead use algorithms to pick up relevant information about a user. They might not listen to you but are capable to build a profile about you based on your demographics, app usage, pictures etc.
Don’t believe this? Do a test and see for yourself, talk about random things and see if the ads pop in? Usually they won’t. Another test could be to deny access to your microphone for all the apps and check if you still receive the same ads?
Companies have powerful algorithms so they can micro-target their advertising. Social monitoring relates to the tools and platforms used to provide with all relevant information about its customers and its needs. Social listening goes a step further, and proposes a conclusion based on the data collected. It gives brands opportunities to analyse and indirectly respond to conversations about them online.
In conclusion, data and information is powerful and is essentially everywhere. There’s a grey area as to how to use this data appropriately and who essentially owns it. Nevertheless, app developers do not listen into our conversations using microphones but instead use technology to work more efficiently.

References:

Listen and Learn: Do Social Media Apps Eavesdrop on Our Calls?


https://www.welivesecurity.com/2020/02/24/is-your-phone-listening-to-you/
https://www.capgemini.com/fi-en/2020/07/impact-of-5g-on-social-listening/

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