Understanding and applying market sentiment.

Understanding Sentiment

Fungibility and the Wisdom of Crowds.

Digital Assets

Cryptocurrencies are tradable digital assets that are widely available online. They offer users security through distributed ledger technology without the need for a third party (like a bank) to ensure trust. Many cryptocurrencies have targeted use cases, and most offer additional features. Some are centrally-controlled.

We track 13 of the most widely-used cryptocurrencies.

Cryptocurrencies are traded on regulated exchanges by both people and computers. Most exchanges are located in countries that have KYC (Know Your Customer) laws. Top exchanges offer dual-authentication security. Nearly all cryptocurrency exchanges offer API technology to programmers who build trading software. Because of this, penalties are sometimes incurred for excessive trading.

Market Sentiment

Is it possible to reliably anticipate prices? Analysts use certain words to express optimism or pessimism about future prices. For example, "bullish" sentiment is when prices are expected to rise. Anticipation preceeds outcomes but sentiment is only appropriate when it anticipates markets correctly. It is detected from words.

We currently follow 97 qualified sources of cryptocurrency analyses.*

Whose sentiment is worth considering? Accurate analysts use predictive words about prices at the right times. Better analysts tend to express appropriate sentiment more often. We track their words for consistency with market outcomes. For a publisher to qualify, words used must anticipate price changes a majority of the time. We keep our database of publishers continually updated.

* As of July 24, 2024 at 8:06 PDT.

Applying Sentiment

How our trading algorithm improves over time.

Systematic Comparisons

Our strategies are patterns of trading decisions for responding to the latest headlines. Sentiment is detected using a Bag of Words Model. We use genetic optimization to evolve strategies that appropriately respond to sentiment.

Our trading strategy has evolved 286 times since June 23, 2019.*

Our alorithm selects for consistently profitable trading strategies. A single trading decision is made each day. Decisions are based on the sentiment and relevance of the words that appear in headlines written by analysts. You can see a record of the optimization process taking place in the ledger.

Bottom-Line Results

How well is our strategy working? Price changes are key information in our strategy optimization process. Our algorithm continually improves its trading decisions by comparing real prices to what qualified sources wrote the day before, and disqualifies the sources with poor track records.

Over the last 365 days, our algorithm's portfolio grew by -10.4%.**

Crypto Trading 101 is the first of two FREE educational games. To win, players must take smaller losses and make larger gains than our trading algorithm over the same period of time based on the same information. Admission to Crypto Trading 201 is based on aptitude. Beat our algorithm's actual results to qualify.

* As of July 24, 2024 at 8:06 PDT.
** See how we calculated this figure in the ledger.