If you've been navigating the stormy waters of cryptocurrency trading using technical analysis, you're undoubtedly familiar with chart patterns, indicators, and candlestick formations. But have you ever wondered what lies beyond the horizon of moving averages and Fibonacci levels? Welcome to the future of trading—where Artificial Intelligence (AI) and Machine Learning (ML) provide you with insights that are lightyears ahead of traditional methods.
1-The Prediction Dashboard
At Coincharted, we’ve simplified this complex technology into a user-friendly Prediction Dashboard, (check this article ).
Here’s a quick tour of its main features:
- Cryptocurrency Selector: Click on the cryptocurrency you want to model and predict its price.
2-Data Input Options
- Historical Prices: This is the price chart traditionally employed in Technical Analysis. Choose the granularity of the data that interests you. For short-term predictions (just a few hours ahead), select minute-level data, which allows you to forecast prices minute by minute for up to three hours.
- Data Points: Decide how much historical data to include in your model. More isn’t necessarily better. In volatile cryptocurrency markets, fewer historical data points often yield more accurate predictions. Conversely, in stable markets, a larger dataset may offer greater precision.
3-Market Sentiment
The third input is market sentiment, generated through sentiment analysis of countless social media posts ( Check this article ). These posts undergo rigorous filtering to include only the viewpoints of cryptocurrency traders and enthusiasts and are subsequently categorized as positive or negative.
- Named Entity Recognition: This feature processes social media posts to eliminate common English words and identify specific components like cryptocurrency names, organization names, countries, and individuals.
- Post Influence Weighting: Coincharted deploys an algorithm that takes into account social media engagement, such as likes and shares, to ascertain the significance of each post and discard inconsequential ones.
- It’s advisable to test price prediction using various combinations of these features to identify the most accurate settings.
4-Analytical Approaches
- Econometrics: The fundamental assumption here is that today’s price is influenced by yesterday’s price along with a random variable. While this is an oversimplification, it generally holds true even for volatile cryptocurrencies. Econometric models, when optimized, can deliver precise predictions with lower computational demands. Therefore, starting with Econometrics is usually recommended.
- Neural Networks: These utilize a multi-layer computational structure inspired by human neural activity.
- Spectrum Analysis: Singular Spectrum Analysis breaks down coin dynamics into distinct components and forecasts each one separately.
Take the Leap
It’s a brave new world out there, if you’re still clinging to traditional technical indicators, you’re missing out on an entire universe of opportunities. With Coincharted’s Prediction Dashboard, you’re not just keeping up with the times; you’re staying ahead of the curve.
