Explore Our AI/ML Crypto Trading Glossary
This resource aims to unravel the terminology used in the world of AI/ML crypto trading, making it accessible for traders of all levels. Below are definitions for some key terms
Artificial Intelligence (AI)
A field of computer science focused on creating systems that can perform tasks that typically require human intelligence. In crypto trading, AI algorithms can analyze vast amounts of data, identify patterns, and make predictions to assist traders in decision-making.
Machine Learning (ML)
A subset of AI, machine learning involves algorithms that learn from data and improve their performance over time without being explicitly programmed. ML models can be trained to predict market trends and optimize trading strategies.
Algorithmic Trading
The use of pre-defined algorithms to execute trades automatically based on specific criteria. AI-driven algorithms can swiftly execute trades in response to market conditions and predefined parameters.
Predictive Analytics
Using historical and real-time data to predict future market movements. AI-powered predictive analytics can help traders anticipate price trends and make informed decisions.
Technical Analysis
Evaluating historical price and volume data to predict future price movements. AI/ML models can enhance technical analysis by considering a broader range of factors.
Sentiment Analysis
Analyzing social media posts, news articles, and other textual data to gauge market sentiment. This can provide insights into how traders and the general public feel about specific cryptocurrencies.
Backtesting
Simulating trading strategies using historical data to assess their effectiveness. AI-powered backtesting can quickly evaluate a wide range of strategies to identify the most promising ones.
Risk Management
Techniques to minimize potential losses and protect investments. AI algorithms can help traders set stop-loss orders and implement risk mitigation strategies.
Market Volatility
The degree of price fluctuation in a market. AI/ML tools can help traders manage and take advantage of volatile market conditions.
Fundamental Analysis
Analyzing a cryptocurrency’s intrinsic value by assessing factors like technology, team, and market adoption. AI tools can process vast amounts of data for comprehensive fundamental analysis.
Liquidity
The ease of buying or selling an asset without significantly affecting its price. AI algorithms can identify liquidity pools and execution strategies.
Econometrics
Applying statistical methods to economic data to uncover relationships and trends. AI-enhanced econometrics can provide deeper insights into crypto market dynamics.
Price Seasonality
Patterns of price movement that repeat at regular intervals, often tied to specific times of the year or market cycles.
Optimized Hyper Parameters
Parameters in AI/ML models that are tuned for optimal performance. AI algorithms can automate the process of finding the best hyperparameters.
Neural Networks
A subset of machine learning algorithms inspired by the structure of the human brain. They can learn complex patterns from data, making them suitable for crypto market analysis.
Technical Indicators
Calculations based on historical price and volume data to predict future price movements. AI models can analyze a wide range of technical indicators to refine trading strategies.
Spectrum Analysis
The study of frequency components in a signal. In crypto trading, spectrum analysis can help identify cyclical patterns in price movements.
Spectrum Analysis Formula
A mathematical equation used to transform time-domain data into frequency-domain data, revealing hidden patterns in price fluctuations.
Price Direction Accuracy
A metric indicating the percentage of accurate predictions about the price direction. AI models aim to enhance accuracy in predicting whether prices will rise or fall.
Market Order
A type of trade executed immediately at the current market price. AI algorithms can ensure timely execution of market orders.
Accumulation/Distribution Indicator
The accumulation/distribution indicator determines the supply and demand level of a stock/asset/cryptocurrency by multiplying the closing price of a specific period with volume. strategies.
Algo-Trading (Algorithmic Trading)
Algo-trading is an automated trading system where buy and sell orders are placed according to the rules of a computer program or algorithm.
Algorithm
A process or set of rules to be followed in problem-solving or calculation operations, usually by a computer.
All-Time-High (ATH)
The highest point (in price, in market capitalization) that a cryptocurrency has been in history.
All-Time-Low (ATL)
An all-time low (ATL) refers to the lowest price a cryptocurrency has hit during its trading history.
Altcoin
As Bitcoin is the first cryptocurrency that captured the world’s imagination, all other coins were subsequently termed “altcoins,” as in “alternative coins.”
Circulating Supply
The best approximation of the number of coins that are circulating in the market and in the general public’s hands.
Bollinger Band
A tool developed by Bollinger to help in the recognition of systemic pattern recognition in prices; it is a band that is plotted two standard deviations away from the simple moving average, or exponential moving average in some cases.
Bots
Automated software that can carry out tasks such as cryptocurrency trades.
Candlesticks
A candlestick chart is a graphing technique used to show changes in price over time. Each candle provides 4 points of information opening price, closing price, high, and low. Also known as “candles” for short.
