Showing posts with label quantamize. Show all posts
Showing posts with label quantamize. Show all posts

Previously only for Wall Street, meet the man now using Artificial Intelligence to better predict the crypto markets...

It's a topic i’ve look into once before, and I believe will many times again - because the potential for AI and machine learning to impact markets shouldn't be downplayed. So if you plan on being around for awhile, now is probably a good time to start learning about it. To gain a better understanding we spoke to Stephen Mathai-Davis the co-founder of Quantamize, a the firm that's applying this tech to the cryptocurrency markets, currently for the 25 top coins. Wall Street has been using similar tech for awhile now, his company being among those doing it. But stock or cryptocurrency, both share the same goal - better insight on when to buy or sale. I should mention upfront - they don’t keep this data to himself, nor does he expect anyone to pay for it without proving it’s worth first. He’s confident enough to let people access the data for 3 weeks for free, and not some gimmick free trial they hope you forget to cancel - they don't even require a credit card. I would suggest giving it a test run by doing some off-book theoretical trades, without really buying/selling any coins. First write down what you would have done without this new data. Then write down what the AI was predicting and follow the results for both. Do this for awhile and see the results,it will be obvious if you're making better trades with it or not. Personally i'm using it as a 'second opinion'. If both myself and the AI agree - it's probably the right move. If i'm about to sell a coin the AI is saying I should be buying, it's a sign I should take another look because perhaps it saw something I missed. Like me you probably have a whole lot of questions, hopefully I covered them. Here's my conversation with Stephen Mathai-Davis from his New Jersey office..

Let's get to know who we're talking to before we get to the technicals, tell us about your background, what did you do before creating Quantamize? Before co-founding Quantamize, I spent most of my career in institutional investment management as both a trader and research analyst.  I was an analyst and junior portfolio manager with coverage responsibilities for global consumer, energy & power, and financials stocks. Over the course of my career, I have been lucky enough to have had the experience of working in areas related to trading (at an investment bank, hedge fund and a large asset management company), research, portfolio management and financial technology.  They were all very cool experiences that really helped shape many of the skills I would need to help launch Quantamize.
How about the rest of the Quantamize team. What unique backgrounds or skill sets do they bring to the table? I co-founded Quantamize with my two parents, Wallace and Prema Mathai-Davis, and we are joined by Rich Ackerman and Paul Baessler.  The entire team has extensive backgrounds in finance ranging from basic asset management to venture capital and FinTech. Wallace and I are the two co-managing members of Quantamize.  Wallace has had a distinguished career in institutional Wall Street, running several large asset management businesses as well as being a senior advisor and board member on several successful FinTech startups.  The five of us are joined by Ed Boll, Bill Visconto, Jim Ryan and Arnim Holzer from the EAB Investment Group. EAB is an elite options investment/trading firm and has known the principals of Quantamize for several years.   So before cryptocurrencies you were using this technology on stocks, now you do both.  There are some obvious similarities, and differences, how did you have to adjust to make that leap from stocks into crypto?
We actually decided to experiment first in the crypto market.  From our vantage point, we thought it made more sense to experiment more with cryptocurrencies since the market is more welcoming to different types of approaches that might be looked at with more skeptical eyes in stock investing (and other traditional asset classes).  Let me illustrate an example: we first implemented our approach of using several machine learning algorithms to cryptocurrencies. Since ML algorithms are notoriously unstable when applied to financial markets, we thought it made sense to use multiple algorithms simultaneously to increase the stability of the accuracy.  Of course, the fact that crypto price data is non-stationary also weighed in heavily on this decision. The net result is that we use many types of machine learning algorithms at one time, both supervised and unsupervised, to predict each crypto we model. Just for reference, each individual crypto we model has its own unique basket of algorithms.  However, all that aside, we still find it easier to predict stocks...the instability of crypto time series data makes it very difficult to model!


Why did you decide to expand into the crypto market? As a firm, we have been drawn to the decentralization focus of the cryptocurrency, and blockchain movement at large. Personally, I have been involved with Bitcoin going back to early stages.  Growing up, I was avid video gamer (RTS much more than FPS and MMORPG) and it felt natural for me to gravitate towards the cryptocurrency community given its similarities to the old online communities I used to participate in when gaming -- feels like many of the innovators in the space are some of those same gamers! Between stocks and crypto, which is easier to predict? (Maybe not 'easier' - but which are you predicting more accurately?
Hands down, it is easier to model stocks.  While we don’t have a blind faith in the brownian motion of stocks, it is certainly easier to build around a basic drift in stocks than it its to find anything remotely reliable in cryptocurrencies.  Like I said earlier, the instability of crypto markets causes the time series data to become non-stationary which materially impacts the ability of traders to apply traditional quantitative techniques to these markets.   What factors are taken into account and analyzed by Quantamize?
We look at several factors and derivatives of factors.  Without getting lost in the jargon, we focus on arbitrage across different exchanges (we look at north of 200 exchanges globally), volume trends, sentiment data, data from the blockchains themselves as well as the behavior of large players, or whales.  Our models consider all these factors as well as embedded decay rates for their unique time series. For a Quantamize user, how is that data then presented to them?
Results are presented in a very straightforward way -- we try to simplify the process of making an investment decision for our subscribers.  Trading signals are either “Buy” or “Don’t Own”. Why did we choose “Don’t Own” over “Sell”? We just don’t think it is wise to recommend our subscribers try to short technology, which essentially is what a digital currency represents, in its nascent stage.  To avoid that level of confusion, we chose to use the language “Don’t Own” over “Sell”. How should a user use this data? People see a "BUY" or "SALE" next to a coin and think that means "dump it all!" or "put your life savings in!" - but really what kind of trading strategy is this intended for?
That is a great question.  Our signals are based on Buy/Don’t Own.  Now, in the real world, we wouldn’t expect users to put ALL of their life savings into a “buy signal” though we do feel that if “traders” see a “don’t own signal”, they should sell everything.  Remember, these strategies are built for those subscribers looking to trade in and out of cryptocurrencies. For those subscribers simply look to create an “allocation” to cryptocurrencies, we have created our specialized portfolios.  These portfolios are built around aggressive, low volatility and thematic strategies. We are especially proud of our low volatility strategy which seeks to manage overall volatility in the portfolio while also placing a special focus on left tail volatility.  We believe left tail risk is the biggest risk facing an investor in the cryptocurrency market today. Our Fat Protocol “cryptofolio” is made up those digital currencies we consider viable utility tokens. We use unique form of AI to create a very balanced allocation for those of our subscribers who are interested in these types of cryptocurrencies. How far out are you able to make predictions that are still at least 'usually' accurate?
Typically, for our trading signals, we only predict out 3 days.  Why only 3 days? We find it difficult to predict further out effectively given how quickly the crypto markets change.  Similarly, trying to predict short-term moves in cryptocurrencies is very difficult with any level of accuracy. We are very proud of the fact our machine learning models have high accuracy scores and are reticent about doing anything to compromise our ability to give our subscribers the best possible recommendation.   Care to share some current predictions?  How about best/worst coin in the short term, and same for the long term.
Ha, that is a tough question.  We never go that far out. However, if we you were to ask which coins we like in general, it is definitely “the fat protocol” coins.  We are qualitatively biased to utility tokens since, essentially, the user is basically buying into a piece of technology. All that aside, if you were to ask us what coin your readers should consider RIGHT NOW, we would definitely say buy Bitcoin.  As goes Bitcoin, so goes the rest of the crypto markets at the moment. Correlations are too high with dispersion trends too low to warrant buying smaller-cap coins in the altcoin space at this moment (assuming limited knowledge of the technology and/or blockchains behind these smaller, less liquid digital currencies).  For those who are interested in investing in altcoins, we would recommend using our diversified low volatility strategy. If anyone reading this would like to try Quantamize out for free, you let them. What do they need to do?
Totally!  Quantamize offers a 21-day free trial without asking for a credit card.  Sign up and take the Quantamize platform for a spin to see if you like it.  Free trial members get full access to the entire platform for the entirety of their free trial.   Anything the horizon that we won't see yet when visiting the site?
We will be releasing an awesome asset allocation tool in the coming weeks which will let our subscribers create diversified allocation of different kinds of ETFs and Bitcoin.  Just imagine a multi-asset allocation that also include Bitcoin based on your risk profile and risk biases. No robo-advisor is offering this type of combination. We will even let users backtest the results of their optimal allocation just to see how it would have done over the past few years.  We are really excited to bring this awesome tool to our subscribers!
Thanks to Stephen for taking the time to speak with us, and you can see it for yourself at https://www.quantamize.com

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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk

Artificial Intelligence that sees the entire market - and tells you what's likely to happen next! See what it's saying now...

When it comes to gathering, and analyzing the information we need to make wise trades - there's some problems with the current standard methods.

The worst of the worst - downright bold and manipulative tactics.

A perfect example of this would be organized 'pump and dump' groups, and while the SEC has taken some action targeting them, there's still plenty out there.

These groups usually work by telling members to meet up online through Telegram or Discord. Then, the group leaders announce which coin every member should buy immediately.

Let's imagine they choose a coin that's worth around $10, the ring leaders get it at that price.  Then regular members of the group are told to buy it, they may raise it up to $13 if it's a larger group with hundreds of members.

Now that everyone in the group has their coins, they begin the next phase - publicly spreading fake news and rumors all across social media. They'll tweet things like 'just heard that this token is about to announce a major new partnership' and 'the coin is probably going to hit $20 by the end of the day'.

To those unfamiliar with what they're looking at, things may appear legitimate.  They search twitter and see multiple people saying the same thing. Then they check the charts and see - this coin is on it's way up! For many, this is enough to trigger an impulse buy.

In reality, they're buying coins the scammers bought an hour earlier - because now the scammers are selling (dumping) them at a profit.

That's the worst of the worst, on the other end of the spectrum are those who share their thoughts and analysis of the market with the absolute best intentions. Genuinely good people who honestly aim to help fellow investors. The problem here just can't be fixed - subconscious bias.

Everyone, even the expert seasoned traders have their own personal favorite coins & projects. When there's valid criticism or bad news they may acknowledge it, but often it's downplayed or followed by an explanation of why that coin will 'bounce back.'

I'm absolutely not saying to stop listening to the opinions of other traders, there's some great minds in the cryptocurrency world and to ignore them would be a mistake. The honest ones would be the first to agree with me - that's why they say "but do your own research" right after they share theirs.

Point being - there's no such thing as someone giving unbiased advice.

Doing your own research...

Clearly, it's essential to have information that comes from a source immune to human manipulation.

Those seeking this kind of data are typically led to Technical Analysis (TA for short).   For those who may be newer to all this, you've probably seen it, it's those charts people post that continue on into dates in the future and they've then drawn in what they think will happen next.

To be clear, I'm not taking a view against it - but be aware of its shortcomings. While current daily volume levels can be taken into account, TA relies very heavily on historical market data.

Many argue that there simply isn't enough historical data, period.  Bitcoin turned 1 decade old just last week, but these methods come from stock traders who developed them with plenty of historical data to take into account.

An even larger point often ignored is how drastically the crypocurrency market changed in 2017. Late 2017 specifically, so barely over a year ago.  The year ended with millions of people first discovering cryptocurrency even existed, and a market of around a dozen coins became thousands of coins competing with each other.   I would argue that 'historical' data before this is virtually useless - it's historical data on a fundamentally different market.

With that in mind we're now left with 1 year of data. I'm not trying to be a downer here, but 2018 was spent correcting 2017, so I'd question even using that.

Point being - TA predictions should be taken with a grain of salt, and i'd strongly discourage making any trades based on TA alone.

The solution:

We need to be able to look at the information that’s important, and come up with an honest prediction of what will come next.

Sounds simple, it's not. Since the human element must be removed to guarantee there is no bias, what we're really talking about here is giving data to a computer and saying 'here's everything we know up to today, tell us what will happen tomorrow'.

While computers haven't been turned into digital crystal balls that perfectly predict future events - we have reached a point where those with access to their answers are given a clear indisputable advantage.

I first heard of these methods using complex algorithms, machine learning, and artificial intelligence a few years ago. At the time, it was only in reference to the stock market. Since then developers have made some significant technical advances, and more importantly - it's now being applied to the cryptocurrency markets.

Wanting to try these tools in my own hands, I found US based Quantamize. (not an affiliate link, I don't get anything if you join).

There are others saying they use similar technology, but the ones I came across were either very expensive with no way to try it first, one was an ICO recently and you need to first acquire their token as they only accept that for payment, and the last one I looked at sells software that you need to keep running on your own computer.

Quantamize, however, gives you 3 free weeks. Their business model isn't 'hope they forget to cancel the trial' they didn't even ask for a credit card number, which seemed like a good sign.

They also seemed to cover the most ground and include 30 coins, it's web based so no need to run software on your computer - they handle all that, then you get the results on their site.

How it works, and why it makes sense:

Imagine you're not just an investor - you're starting a cryptocurrency trading fund. First thing to do is hire your research team.

You hire someone whose only job is to analyze daily trading volume, another person to focus only on price movements, another to analyze using all historical data, another to scan social media and gauge public sentiment, and another who reads every news article about cryptocurrency every day.

At the end of the day, you call a team meeting. You go through the list of coins your fund invests in,  and each team member answers based on the data they looked at - will the coin go up or down in price?  If most of the team says a coin is going up, it probably will.

Now - replace all of these people with artificial intelligence and machine learning algorithms running non-stop on a network of high powered computers, endlessly consuming and analyzing new data as it's available - this is Quantamize!

Called a multi-factor approach, for each market fundamental (daily volume, sentiment, etc) Quantamize develops a proprietary version of their artificial intelligence that only looks at the 1 cryptocurrency it was built for – there are unique AI algorithms for every cryptocurrency that Quantamize analyzes.

Let's circle back to the introduction where we discussed pump and dump scammers colluding to create false excitement around a specific coin to artificially 'pump' the price up.

First, Quantamize's AI dedicated to scanning social media posts will detect that currently there is a large increase in positive things being said about this coin.  But - the AI's analyzing market fundamentals may see this coin has been on the decline for some time, daily trading volume has been low, and for months the long term outlook has been negative.

The end result would be a 'do not own' signal - because tricks that rely on using human emotion to make someone buy or sell simply won't fool the algorithms.

Using the data:

You still do all your own trades, on whatever exchanges you currently use.  You don't put your cryptocurrency in the control of artificial intelligence or group of traders, you simply see what Quantamize is suggesting and decide if you want to act upon it or not.

Quantamize presents the data to be used in 3 different ways.

● Signals - All this research summed up and shared as a simple list of the 30 coins, with a green "buy" or red "do not own" (sell) next to it.

You don’t need to be a day trader to use these, the term 'signals' is often associated with high frequency traders who watch for signals changing minute by minute - Quantamize’s signals  represent a 3 day outlook.

I consider myself a trader who manages his own portfolio, most cryptocurrency investors are. So for myself and most of you reading this, Quantamize's signals are a resource to check before you press that buy/sell button - make sure Quantamize isn't seeing something you may have missed.

● Portfolios - Quantamize uses their research to suggest full portfolios for those who may want to build one from scratch based on Quantamize’s research.  There’s multiple options depending on if you who want to play it safe, or willing to take larger risks for potentially larger rewards.

If you're looking for a complete strategy where all you need to do is follow suggestions - this is for you.

● Research reports - in depth look at the news affecting the market, and in depth reports on specific coins and projects.  If you've been hearing about a coin and want to really dive in and learn more, this is the place you would find the information.

Take a look, try adding this data to your decision making process, and see if it leads to better, more profitable trading. For 3 weeks of full access for free visit: https://www.quantamize.com

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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk
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