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How AI Can Help Traders Maximize Alpha and Profits


How AI Can Help Traders Maximize Alpha and Profits

Recently, cryptocurrency trading has become a more populated space, as traders recognize that they can capitalize on the crypto market’s volatility to see oversized returns. However, volatility is a double-edged sword, as hard to predict drops in the market can punish the more inexperienced traders if they do not have access to the right information and analytics at the right time.

AI Brain

Because of this, it isn’t uncommon to see traders being overly conservative and not maximizing their profits, or we see traders become investors, holding on to their cryptocurrencies for dear life as a long term play. Neither of these strategies are optimal, and it is clear that traders are leaving quite a bit of potential value on the table.

Artificial Intelligence (AI) is one technology that many traders, especially the experienced ones, are turning to in order to maximize profits in up markets and minimize risk in down markets. Unlike bots, which use static algorithms, AI uses machine learning to optimize trading, making it more like a PhD for every cryptocurrency trading indicator than a simple trading bot.

Digital PhD

Humans can, relatively, analyze a lot of information. Spending a few hours, humans can read expert articles, track markets, and keep their ear to the ground for any news that may change cryptocurrency prices. However, one human will never come close to an AI’s ability to parse an incredible amount of information in no time.

Additionally, AI can analyze social sentiment with lightning speed and precision, one crucial element that has been proven to be a determining factor in cryptocurrency prices. This ability gives AI a huge leg up on any single human investor, as it automatically has more information at its disposal. It takes a human three seconds to analyze a tweet, but it takes AI less than one millisecond to analyze a tweet as bullish or bearish.


In a similar vein, AI can recognize trends and employ strategies that humans simply cannot. While it may be easy to see if a market is rising or plummeting, AI can see beyond this, processing information and picking out points where the market is likely to take a turn one way or the other. In this same vein, AI has the power to test thousands of strategies against the market to find which one fits the best, something that humans certainly do not have the time nor money to undertake.

Anatomy of a Strategy

AI can also employ more complex trading strategies that are difficult to execute for human traders, and can adjust on the fly to maximize profits. Humans can only execute trading strategies during a certain portion of a day, while AI can trade around the clock, altering strategies to maximize gains. Leveraging the delicate and more nuanced changes in the market is something that only AI can do on a consistent and meaningful basis.

Humans are by nature not analytical beings. We struggle to accept losses when they must come and cling to the hope that a profitable investment will become even more profitable, despite signs pointing elsewhere. The Sunk-Cost Fallacy is a perfect example of this. Artificial Intelligence, quite to the contrary, never struggles with this, allowing it to know the best entry and exit points given the mass of information it has at its disposal.

There currently exist some trading tools available that utilize the power of Artificial Intelligence to help its customers achieve better results in the market, but none of them go far enough nor cover enough angles. This is where a product like RoninAi comes in, which some believe is the complete and well-rounded tool to capitalize on the multitude of advantages that AI can bring to cryptocurrency trading.

HODLing as a trading strategy is far too common nowadays. While it may be profitable in an up market, a down market will see your investment take a massive hit, all for the sake of staying true to your initial investment. Additionally, your Alpha with this strategy will be exactly zero. This is where external tools utilizing AI and machine learning step in, maximizing Alpha in every market and making the most of the exciting and very profitable world of crypto trading.

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