How to Use Quant Trading in Crypto
Cryptocurrency’s meteoric rise in 2017 has made everyone take notice, from the layman investor to the Wall Street wizard. While the market seems to have plateaued since its peak at the end of last year, there’s still plenty of potential for huge gains if you know how to navigate this exciting new frontier.
In this guide, we’ll explain everything you need to know about quant trading and how it can help you profit from cryptocurrency fluctuations...
What is quantitative trading?
Simply put, quantitative trading is using computer models to identify profit opportunities. Essentially, you feed information into a computer and it tells you when or where to trade.
The use of quantitative trading goes beyond stocks; it also includes commodities and foreign exchange markets. It can be used for long-term trend analysis as well as short-term intra-day swing trading. With that said, what does quant trading have to do with crypto?
As it turns out, quite a bit. Since cryptocurrencies are traded on exchanges around the world 24/7, there are plenty of opportunities to take advantage of price fluctuations.
In fact, some traders make up to 90% of their profits from arbitrage – which is essentially taking advantage of different prices across exchanges at any given time.
While arbitrage may seem like an easy way to make money, it requires a lot of research and dedication in order to execute properly.
What does this mean for the cryptocurrency market?
The cryptocurrency market is highly unpredictable, and it’s also very easy for a new investor to feel overwhelmed by its complexity. Like many other cryptocurrencies, Ethereum uses blockchain technology to keep a decentralized ledger of all transactions.
The reason why markets like Ethereum have grown so much recently is that major investors are taking an interest in them; huge banks, venture capital firms, and corporations are now all looking at ways they can capitalize on crypto opportunities.
This means that there will be even more money flowing into crypto over time, and therefore we can expect rising prices. But quant trading has made it possible for investment managers to automate their decision-making processes—making high-frequency trades (like these) simpler than ever before.
Just how effective will quant trading be as far as predicting price movements?
The future of altcoins
While Bitcoin is still one of the most popular cryptocurrency choices on sites like CoinBase, Litecoin and Dash are slowly gaining traction as well. And for good reason: all three offer certain advantages over Bitcoin that make them worth considering.
It’s important to note that altcoins are not inherently bad investments – they can be a great way to invest if you do your research and time things right.
With that said, here are a few factors worth considering when determining which altcoin makes sense for you: Do I have faith in its technology?
Is it sustainable? Will it be around in five years? What will its overall impact on the crypto space be? Is there any hype or media buzz around it right now?
Current trends we are seeing
1. Increasing volatility is making it easier for high-frequency and quant traders.
2. The crypto market hasn’t seen a full-scale global recession yet, but growth has slowed—in 2018, we expect to see increased volatility and slower growth trends (with perhaps one or two exceptions).
These conditions are favorable for strategies that capitalize on long-term price trends (rather than trading against short-term movements).
3. Stablecoins like Tether have also contributed to greater overall stability in cryptocurrency markets, especially during times of higher volatility; we see them as being additive rather than transformative at current levels, but we could potentially see them rise in popularity if cryptocurrencies begin to show more sustained upside potential over longer periods of time—and if fiat currencies continue their downward trend.
Resources on how to learn about quant trading
One way to begin your quant-trading education is through online video courses, including these two from John Hull:
Introduction to Algorithmic Trading Strategies; and How to Quant Trade: Principles. For free resources on how quantitative analysis works, take a look at books like Andrew Lo’s Adaptive Markets and Tobias Carlisle’s The Volatility Surface. On top of that, I suggest reading everything you can get your hands on about machine learning (and deep learning).
That includes blogs such as those by Andrej Karpathy and Yoshua Bengio. Another great resource for understanding machine learning is Coursera’s Machine Learning course taught by Andrew Ng (who helped start Google Brain).
If you want to learn more about trading strategies and algorithms specifically for cryptocurrencies, check out YouTube channels such as CME Group or Coin Mastery.
How can an investor get started today with quant trading?
What’s quant trading? In short, it’s automated trading that uses computer algorithms instead of human insight.
The goal is for each trade (or quant in quant trading parlance) to be made with minimal loss, maximum efficiency, and an attempt at consistency.
It doesn’t matter if you invest on a day-to-day basis or make trades less often. With quant trading, even small amounts can have large impacts when accumulated over time. Here are some ways you can get started today with quantum trading
1. Download a platform
2. Research what kind of trader you want to be
3. Learn how markets work
4. Choose your currency
5. Get started! To learn more about how to use quant trading in crypto, keep reading!
Conclusion
There are many ways that quantitative analysis can help traders. Regardless of your trading style, there is plenty you can gain from these advanced strategies. Whether you’re a novice trader or you’ve been making money for years, it never hurts to learn a thing or two about quant trading.
Learn everything you need to know about quant trading on Cryptonaire Today. For more information on how using quant strategies can help your crypto trades, click here!
At the end of the day, though, if you’re going to be using any type of advanced strategy in your crypto trading activities, it would be best if you had a degree in Mathematics and computer science.
Thankfully enough there are people who do understand all these concepts; they have degrees and they still want to share their knowledge with others and make some extra cash while doing so as well. The best way is through an expert advice site like cryptonaire today.
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