Learning to trade cryptocurrency reddit
Day traders normally use technical analysis to predict where the price will move. Let's mimic them and add some indicators to our dataset. Well, looks like our predictions did get a little bit better, but not by that much, and, unless you know what you're doing, it's not worth it to go through the trouble of calculating them if you're only interested in predictions for the next day.
Let's augment our dataset with some community activity data. Obviously, the more you can capture the better, but for this toy example we'll only use reddit.
Let's see how this data can improve our price forecast. One interesting thing to notice is that our model seems to be a little pessimistic about ethereum - it always predicts a price point that's slightly lower than what it ends up being in real life.
Blockchain activity is the closest proxy for ethereum's intrinsic underlying value. Whoever learns to extract the most useful features from the blockchain is going to get a competitive advantage on the market. Let's see how well the features extracted by etherscan perform.
And we arrive at a surprising result! Not only did more data not make our model better, it actually made it worse! This can be attributed to two factors: And indeed, if you look at ETH's price today it seems to have corrected to a lower value that better reflects its true price.
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Ping us in comments when you publish your project, would love to take a look! If you're interested in applying research and statistics to cryptocurrencies you'll love using Rados. Award for the number of upvotes received. In this blog post you will find out Whether technical indicators are useful for predicting cryptocurrency prices How much you can improve your predictions using alternative data, such as blockchain structure and reddit activity How you can and should use machine learning to aid you in trading Supervised learning While using reinforcement learning in real-world trading applications is definitely promising and will undoubtedly be used in the future, it still suffers from a number of issues preventing it from going mainstream: Production-ready reinforcement learning models take days to train even on high-end GPUs.
Need a lot of data. At its core, deep Q learning algorithm is trying to learn the reward function given the state of the system i. It works by trading on money borrowed from an exchange. If you knew the price of Bitcoin was about to drop, you could open a leveraged short position by telling the exchange to sell some borrowed money, and buy it back later on. In the stock market this is very common for professionals, as they earn more money than traditional buying and selling.
But in cryptocurrency markets it doesn't follow the same rules, there are extra risks that you need to be aware of:. Any links to exchanges below are affiliate links, so we'll get some money if you sign up via them.
Compared to many exchanges is has a very user-friendly interface. If you're a more advanced trader, BitMEX offers much higher leverage, up to x. Using leverage this high is very risky, where even a small price movement can cost you all of your money, so only use this if you're happy with this risk. If you've been trading for years, and have reliably predicted price movements then yes, try using margin trades.
Don't use them all the time, just in the cases when you're certain of a price movements even then, use a stop-loss in-case you were wrong. If you're reading this guide though, you're likely either new to trading - or just new to cryptocurrency. In both of these cases, no - you shouldn't be using margin. If you were to try your hand at margin and get it wrong, you could potentially lose your entire balance on an exchange. A good rule of thumb for leverage is, if you have to ask if you should use it, you aren't ready to use it.
This site cannot substitute for professional investment or financial advice, or independent factual verification. This guide is provided for general informational purposes only.
The group of individuals writing these guides are cryptocurrency enthusiasts and investors, not financial advisors. Trading or mining any form of cryptocurrency is very high risk, so never invest money you can't afford to lose - you should be prepared to sustain a total loss of all invested money.
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Bitcoin Margin Trading for Beginners. What is margin trading? There are two terms you need to know about to start: If you were to buy Bitcoin on an exchange, you would then own it; if you wanted you could then withdraw it to a wallet or another exchange.
This is how most beginners trade.