By Dan Da Rosa from ETHAX
Artificial Intelligence (AI) and algorithmic trading are changing the way trading is taking place. With AI predicted to revolutionise the medical, entertainment, cyber-security, transport, and financial industries by 2050, its application in many sectors is inevitable. As we all know, crypto (just like traditional stocks and shares) can be a volatile market. This year we have seen the crypto market fluctuate enormously, with Bitcoin experiencing a near 70% drop in price since last December. Such fluctuations come with the territory of trading, and can be further affected by both local and global events, which also impacts both the crypto and stock markets. However, it is more beneficial for investors if the crypto and stock markets are prepared for this, and advanced trading technologies can assist overall trading portfolio management.
Who Uses AI for trading?
There is a divide in the investing market between those who have had previous experience of trading and those who are just starting out. However, no matter what your level of expertise, many people and institutions can use AI tools and aids to help boost their investments, particularly retail traders, who make up a large portion of the crypto community.
There are so many types of different trading platforms that the industry is becoming crowded with those who are seeking to make a profit, rather than those trying to educate others. No matter how advanced the use of AI when trading in crypto, it should always be accessible to anyone looking to trade.
Robo-Advisors Vs Bot Trading
Robo-advisors are on the rise, despite not having been around for very long. Robo-advisors are digital platforms that provide automated, algorithmic investment services with minimal human supervision. As more people become interested in investing, they can see that robo-advisors are an easy way to make money without having to do much themselves. Essentially, you select your preferences and the robo-advisor sets you up for the rest. It focuses on the numbers, rather than the human element, which many see as a good thing, especially as the trading market grows. S&P Global Market Intelligence also estimates that the total value of assets managed under robo advisors will grow to over $400 billion by the end of 2022.
On the other hand, bots can also be a simple solution to help aid the trading process, rivalling robo-advisors for popularity in recent years, as around 80% of trading on the stock market is done via algorithmic-based automated programs.
Bots have become more prevalent as they can react quickly to constant changes in the crypto market, and dedicate more time to the currency markets to achieve the best trades. As crypto investments have developed in recent years, so have bot trading platforms; the average trader can use bot trading to their own advantage. Bots can hold a lot of trading information within the crypto and stock market space, not to mention they make much quicker decisions than a human investor. Essentially, these bots are cutting out the middle man, usually a hedge fund manager or digital asset manager.
However, this accumulation of bots has crowded the crypto market, and is a contributing factor to pump and dump scams that use algorithmic trading systems to make it look as though a specific cryptocurrency is about to hit a bull run by placing lots of buy and sell orders between itself. This then creates hype and artificially pumps the price of the crypto to encourage traders to get on board and feed the trend. It is scams like these that would be reduced if there was more regulation in the crypto sector.
At ETHAX we believe that crypto is for all. It doesn’t matter if you are starting out new to investing or if you have been investing for years, anyone can invest at any level. ETHAX is amongst the 0.01% of licensed and regulated cryptocurrency businesses that supports clients to invest, helping them as much or as little as they choose. Unlike some bot trading platforms that advise investments following the most popular trends, the ETHAX Trader, our upcoming AI trading system, makes smart decisions based upon a successful proven history of crypto currency trading. It supports people to trade safely and efficiently, combining several years of successful trading in digital assets morphed with the latest in machine learning and AI software.
The future of investor education relies on trusted brands, like ETHAX, giving investors a trading system that they can learn on safely. You have to provide clients with the right tools to be able to invest properly, rather than creating a bot trading platform and hoping for the best. At ETHAX, our Machine Learning Trading System provides unparalleled access to historical market data, thereby allowing investors to perform comprehensive back-testing of their trading strategies prior to committing to a trade. This is an essential tool even for advanced traders. ETHAX Trader does the work for you by providing a fully automated trading system, whilst giving you the option to be more involved in the trading process with its vast array of advanced trading tools. This is what the future of educating investors looks like.
AI Tools for the Future
Algorithmic trading technology is able to analyse large amounts of complex trading data in fractions of a second and select an optimum set of likely outcomes based upon the parameter settings. Execution of trading decisions can also be completed in milliseconds and much faster than the human trader. This process is not solely based on a learnt predictive outcome, but rather an intelligent assessment (using an in-house data science team and professional crypto currency traders) of past, and present information and future projections. With the use of this technology, investors will be able to make more informed decisions when trading their crypto assets and this technology clearly represents the incalculable value of integrating AI tools into trading markets. ETHAX is implementing this technology into its upcoming product, the ETHAX Trader, expected to launch by Q1 2023.
At ETHAX, the team trusts the quality and development of the ETHAX Trader to make informed trading decisions on our client’s assets. Ultimately, with the right crypto platform to learn how to trade smarter and more efficiently, traders at all levels will be able to benefit from machine learning and AI technology enhanced trading systems such as the ETHAX Trader.
So what does this AI technology mean for the future? Trading will become faster, portfolio returns will be increased over time and competition to provide technology in this space will increase. These are all positive factors that will ultimately benefit the cryptocurrency and stock market sectors, independent clients, financial institutions and all businesses involved in the use of these technologies.