RoninAi Alert Guide: How to Understand Alerts and Use it
This RoninAi Alert Guide Includes:
- AI-powered alerts: How it works
- Market Manipulation Signals and How to Trade Them
- Market Trend Reversal Index
- Market Trend Intensity Indicators
- Market Top and Bottom Index and How to Trade It
- Influencer Social Market Sentiment and How to Trade It
- Institutional Volume Signals
AI-powered alerts: How it works
RoninAi offers an extensive list of crypto-market alerts powered by AI to keep users up-to-date about both explicit and hidden market activities. Alerts are based on both market data and social sentiment indicators. This section will explain in more detail reasons behind such great predictive power of RoninAi’s market manipulation signals.
A number of research studies have been conducted to identify factors influencing prices of cryptocurrencies. For example, the study by Aleh Tsyvinski and Yukun Liu from Yale University titled “Risks and Returns of Cryptocurrency” published in July 2018 concluded that “proxies for investor attention strongly forecast cryptocurrency returns”. Researchers computed investor attention as the number of Google searches and Twitter posts.
Why does social sentiment play such an instrumental role in predictive power of cryptocurrencies? The answer is very simple and intuitive. Crypto space is crowded with retail investors while institutional investors represent an insignificant proportion. Retail investors are more keen to have an emphasized reaction to news and opinions absorbed from the social media platforms including Twitter, Facebook, Instagram as well as Google. Proper reading and analysis of social sentiment factors and market data could give insights about market manipulation, market trend reversals, market trends intensity, market tops and bottoms, opinions of crypto influencers, and large institutional trading.
Market Manipulation Signals Guide
Market Manipulation Signals
Market manipulation signals provide an alternative view on the cryptocurrency market. RoninAi algorithms spot unusual market behavior detected by social sentiment indicators and generate an alert. Based on our observations, market manipulation signals are great proxies for increasing volatility. High volatility leads to higher potential to profit couple with higher level of risk. Traders who are equipped with strategies that maximize returns while limiting risk are actively seeking to take full advantage of high volatile environments.
Crypto manipulators are aware of the fact that retail investors are driven by social media posts, and they are exploiting social media platforms for their own benefit. Purposeful social media attack could happen in various forms, and every attack is different. When a critical mass of social influence reaches a certain level, it impacts the price of cryptocurrency. The time it takes for the price to move ranges dramatically depending on the amount of social media posts and announcements, speed with which the message is being transferred amongst crypto players, timing and time zone, amount of crypto players affected by wrongful messages, and so on. Some manipulation attacks never realize due to failure to absorb sufficient volume from affected retail investors. RoninAi analysis shows that while a portion of market manipulation attempts fail, significant majority of market manipulations lead to above average volatility.
The trend prediction AI offered by RoninAi, could be very effective in identifying whether cryptocurrency will go up or down. Since there is no way to completely prevent crypto market manipulations, the main goal is to identify manipulation attempts beforehand and vigilantly watch the market prepare to adjust crypto positions. Market manipulation signals do the job masterfully well. It is not necessary to go far for examples. Just one week after RoninAi went live the following market manipulation signals have been spotted.
Some of these alerts got an instant market reaction, while some took a couple of hours to realize. The average time to watch markets after the alert is 30 to 60 minutes, but longer time frames should be taken into consideration as well. As portrayed in the chart above, unusual activity market alerts result in significant moves in either direction and could be effectively applied as additional indicators for one’s investing strategy.
But which cryptocurrency does react better to these market manipulation signals? The rule of thumb is that more volatile cryptocurrencies are more susceptible to these unusual market behavior alerts.
Market Manipulation Signals: How to trade them?
Now that you know how it works, lets move into how you can use this alerts. This section will explain in more detail the reasons behind such great predictive power of RoninAi’s market manipulation alerts.
Trading is a very complex endeavor; however, the fundamental truth behind many trading strategies could be boiled down to two basic phases: identification of high volatile periods and figuring out the right side of the trade. Market manipulation signals provide for the first rule very successfully, now it’s time to figure out the second part of the equation.
There are a number of methodologies to increase the probability of success when identifying whether cryptocurrency will go up or down, and the trend prediction AI offered by RoninAi could be very effective.
One of the alerts took place at 3:21 PM EST on September 30, 2018. Ether reacted almost instantly falling by 2.7 percent with the consequent recovery by 3.6 percent shortly after.
RoninAi forecasts resulted in the following result of trading aforementioned market manipulation alert (shown on the chart below). The 12-hour chart below shows that some of the major downsides have been avoided by precise AI predictions.
To see a more detailed performance of AI-powered signals let’s zoom in. As the chart below AI has correctly identified three major areas of decline represented by flat lines. Avoidance of three downsides led to AI (finished with $9,950) outperforming HODL (finished with $9,700) by an almost 2.6 percent.
Watching markets around market manipulation alerts could add value to market players with various trading time horizons. Trading market manipulation signals with trend prediction AI could improve risk-reward ratio. However, RoninAi team urges users to create their own trading and investing strategies.
For example, what is known about market manipulations? Market manipulations result in authentically depressed or inflated crypto prices that later come back to their normal levels. Would it be a good idea to purchase cryptocurrency after a significant price decline triggered by an unusual market activity event? It is easy to observe the effectiveness of this trading strategy by following trend prediction AI and its forecasts around market manipulation signals.
Let’s create a more specific strategy based on the aforementioned hypothesis. Only large declines of 2.5 percent and above will be taken into consideration. Once the price declines by 2.5 percent after the alert, the first trend prediction AI of above 50 percent would signify an entry point. Exit point will be based on a stop loss of 2 percent and a price target of 3 percent.
From 12 market manipulation signals between September 28 and September 30, 3 resulted in a decline of more than 2.5 percent. All three trades have realized a profit of above 3 percent. To observe every trade in more details, let’s zoom in.
Trade 1 required patience as it took some time after the alert for the market to react. However, depressed crypto price recovered quite quickly and grossed 3.2 percent within 15 to 20 minute timeframe.
Trade 2 was similar, requiring some waiting time to get market’s reaction. With virtually no down tick, a return of 3.9 percent was achieved within an hour and a half. Clean trade thanks to the combination of market manipulation signals and accurate trend prediction AI.
The last trade was reverse. Ether dropped by 2.5 percent sufficiently rapidly, and once trend direction AI detected the entering point five hours of holding resulted in 3.1 percent. Three simple trades earned a cumulative return of above 10 percent in three trading days.
Just to be clear, the strategy described above was created on the spot by one of RoninAi’s data analysts to illustrate the unlimited amount of possibilities of how AI could empower crypto investing for any user. Users should create or improve their existing investment strategies by applying RoninAi’s analytics.
Market manipulation alerts could be traded not only with trend prediction AI, but also with the help of the outside tools. Technical analysis indicators (RSI, ADX, MACD, etc.), fundamentals, news, and similar tools and sources could be used as well to confirm price direction.
Market Trend Reversal Index
Market Trend Reversal Index is based on the emotional sentiment absorbed and calculated from social sentiment. Emotional sentiment identifies whether social sentiment consists of rational reasoning and tangible beliefs or contains non-tangibles and emotional responses. Depending on the magnitude of public opinion, emotional sentiment can predict significant market volatility and, identify market trend reversals.
Social sentiment versus eEmotional sentiment creates 4 important quadrants as illustrated on the chart below. It is in the periods of high emotionality (Quadrant 1 and Quadrant 2) that market trend reversals often take place due to substantial amount of retail investors present in the crypto market. RoninAi algorithms identify timeframes featured with high level of emotional sentiment and detect behavior of social sentiment and social sentiment fluctuations from one time period to another.
RoninAi offers short-term, medium-term, and long-term trend reversal alerts to keep users up-to-date regarding potential market trend reversals. For example, longer-term reversals applied to Bitcoin Cash (BCH) are shown on the chart below. Trend reversal alerts successfully identified the beginning of a bullish trend (+13%) in the beginning of July 2018 followed by a bearish trend reversal (-36%) at the end of July 2018, which lasted up until end of August 2018.
Trend reversal should be interpreted in the following fashion. As mentioned by Kenneth Fisher, renowned asset manager and founder of Fisher Investments, whose net worth is estimated at $3.3 billion, there are a total of 5 market states: very bullish, moderately bullish, sideways, moderately bearish, very bearish. Trend reversal does not necessarily indicate the switch from bullish trend to bearish and vice versa. Trend reversal alert, whether it is short-term, intermediate or long-term, signify that the current market state is over. If the market has been trading sideways, the trend reversal alert will indicate that the future trend can be very bullish, bullish, bearish or very bearish, but the sideways trend is likely over.
Market Trend Intensity Indicators
Market Trend Intensity indicators are based the social sentiment parameter of social outreach. Social outreach measures the spread of social media conversations targeting cryptocurrencies. RoninAi tracks the magnitude of crypto-related content dissemination and estimated the size of the audience for crypto-related messages. Large scale social outreach identifies market trend intensity, which could drive crypto markets more significantly. Market trend intensity indicators could successfully forecast large substantiated crypto price moves. Conversely, significant price moves taking place on weak market trend intensity metric are likely to be unsubstantiated with consequent fading away.
BTC price chart below is a great example of market trend intensity indicators’ effectiveness. High trend intensity indicators (level 4 and level 5) typically get triggered before strong bullish and bearish price moves and trends. Low trend intensity indicators are great for shorter-term price swings. All 5 trend intensity indicators offered by RoninAi could add enormous value to swing traders and long-term investors, serving as a litmus test for the trend strength.
Another useful feature of the trend intensity indicators is the ability to spot false moves. Some of these false moves are the result of unsubstantial demand prior to the upside or unsubstantial supply prior to the downside. Other false moves could be just plain market manipulations. The BTC price chart below is a great illustration of how weak market trend intensity indicators (level 1) coupled with sharp price upsides could indicate false moves with the consequent downsides. Vice versa holds true.
Market trend intensity indicators are a great tool to detect the strength of a market trend that’s about to come. It has a number of uses for traders and investors.
Market Top and Bottom Index
Market Top and Bottom Index
Market Top and Bottom Index is based on the social sentiment parameters of social volume. Social volume measures mentions of a given cryptocurrency in social media. Most talked about cryptocurrencies tend to have higher interest from investors leading to higher trading volume, significant price movement and increased volatility.
Short-term and long-term social volume give additional insights about the state of crypto markets. Without taking into consideration bubble-like periods, the major part of the upside takes place before the crowd starts getting in. Conversely, when retail investors have the highest level of enthusiasm and excitement about the crypto space represented by an increased social volume metric it is the time to consider closing the position and preparing for a decline. Thus, when short-term social volume crosses above the longer-term social volume the market tends to run into bearish territory and vice versa. The price chart of LTC below is a great example indicating effectiveness with which crosses of short-term social volume on top of long-term social volume accurately forecasted major market retracements.
RoninAi team designed social volume-based indicator, Market Top and Bottom Index, which detects local market maxima and minima. The index gets triggered when long-term social volume substantially crosses above short-term social volume and vice versa. Results are quite spectacular. LTC price chart between August 23, 2018 and September 7, 2018 shows how price tops and bottoms do not only generate profitable entry and exit points, but also help avoid significant market downturns, thus, improving overall strategy performance.
Market Top and Bottom Index detect local market extrema and could significantly improve trading strategies focused on momentum and market trend reversals.
Market Top and Bottom Index: How to trade it?
Market Top & Bottom Index signals can be effectively used as entry and exit points. It is important to remember that Market Top & Bottom Index is based on social sentiment and can be different from traditional market top and bottom oscillators based on technical analysis. The difference could be captured in the quote of one of the greatest traders of all times, Jesse Livermore: “The good speculators always wait and have patience, waiting for the market to confirm their judgment.” Technical analysis indicators make it very complex and intricate to establish market tops and bottoms with consequent confirmation of trend reversal. Market Top & Bottom Index by RoninAi, on the other hand, is supposed to include trend confirmation by the masses.
Indication of local maxima (market top) and local minima (market bottom) coupled with trend confirmation can be sufficiently straight-forward with this social sentiment indicator. Let’s look at statistics of how profitable market top and market bottom alerts can be if they are simply used as entry and exit points. Statistics provided below imply that market bottom alerts serve as points of market entry while market top alerts serve as points of market exit.
Between July 2, 2018 and October 15, 2018 Market Top & Bottom Index detected 17 market top and 17 market bottom alerts. In case of ETH, Market Top & Bottom Index alone would generate a total profit of 8.3 percent in just three and a half months. It is important to note that ETH HODL sold off dramatically by 56 percent within the same time-frame. It is important to understand that not every signal will be profitable, but in the long-term the strategy significantly outperformed the HODL. Finally, it is important to understand that Market Top & Bottom Index alerts can be a lot more fruitful when used in a combination with other social sentiment alerts and AI smoothing strategies.
The table above shows that when market top and bottom have been identified incorrectly pretty significant losses could be expected. One way to avoid such losses is to use a stop loss. Statistics of trading ETH with Market Top & Bottom Index alerts with and without a stop-loss is presented in the chart below. While no stop loss strategy outperformed the HODL by more than 60 percent, the stop loss strategy effectively protected against downside swings and captured the upside grossing a total of 23.7 percent. RoninAi social sentiment alerts are a powerful tool for taking advantage of cryptocurrency markets and different combinations of these signals can provide great benefit for cryptocurrency investors.
Influencer Social Market Sentiment
Influencer Social Market Sentiment
Influencer Social Market sentiment represents syndicated tracking index measuring perception of cryptocurrency markets by thousands of crypto influencers. Activity of opinion makers have significant impact on social media users and, thus, on crypto market direction. Opinion makers tend to have more substantiated and factual reasoning turning Influencer index into a strong leading indicator.
Influencer Social Market sentiment takes into consideration short-term and long-term market sentiments of influencers only. It is important to keep in mind that influencers do not always have enough power to impact market direction. However, RoninAi research has found that social sentiment from influencers does especially well when forecasting market declines. Influencer sentiment can also be used as a trend confirmation.
Price chart of BCH below serve as great examples of how influencer sentiment can add value to both long-term and short-term investors. At times of high volatility, negative influencer sentiment could signal market retracement. In just two weeks between July 28, 2018 and August 1, 2018, holders could have avoided a total of 25 percent loss (three declines of 8%, 7% and 10% respectively), while realizing an 8 percent upside on a quick rally.
In the following two weeks when BCH sold off dramatically, influencer sentiment accurately predicted two major declines of 12 percent and 16 percent respectively. Later the indicator detected positive influencer sentiment resulted in 10 percent upside.
It is important to keep in mind that influencers are still human beings with their often times biased judgements of their blockchain projects and crypto market as a whole. After tracking the indicator more closely, users might discover that the negative influencer sentiment offers more accurate predictions than the positive influencer sentiment. The reason behind it could lie in the fact that crypto opinion makers are often times more positive than negative when talking about their project, just as any CEO or company founder would be more positive than negative when talking about his or her company. When the negative influencer sentiment strikes in though, it could serve as a more important market predictor since their insights are so negative that they outweigh generally positive sentiment about their projects or the entire crypto market.
Influencer Social Market Sentiment: How to trade it
Influencer Social Market Sentiment signals also can be effectively used as entry and exit points for cryptocurrency markets. Influencer Social Market Sentiment alerts are based on the social market sentiment expressed by cryptocurrency influencers. Indication of market entries and exits coupled with trend confirmation expressed by the Influencer Social Market Sentiment can be sufficiently straight-forward.
Statistics of buy/sell signals triggered by the Influencer Social Market Sentiment alerts is provided in the table below. Between July 2, 2018 and October 15, 2018 Influencer
Social Market Sentiment detected 31 positive and negative sentiment alerts. In case of BTC, Influencer Social Market Sentiment generated total return of 9.7 percent when BTC HODL finished flat (+0.9%) within the same timeframe. When used in combination with AI smoothing strategies, Influencer Social Market Sentiment could be even more profitable.
Integration of stop losses could be proved very useful to prevent some major downsides. In case of XRP, for example, the stop loss of 5 percent applied to Influencer Social Market Sentiment alerts generated total cumulative return of 12.8 percent in just a little over 3 months. RoninAi social sentiment alerts are a powerful tool for taking advantage of cryptocurrency markets and different combinations of these signals can provide great benefit for cryptocurrency investors.
Institutional Volume Signals
Cryptocurrency markets are represented by a number of highly liquid financial assets. Sourcing out institutional volume flow has a number of advantages. Institutional players, mainly represented by crypto hedge funds, search for and establish important market insights before making a move. Typically, large institutional volume would represent an accumulation of a long position representing a bullish signal for the markets. However, institutional volume could also suggest confirmation of existing trends or its future reversal. Market moves on large institutional volume tend to be stickier compared to moves with light volume and should be paid close attention to.
From July 6, 2018 to September 2, 2018, Bitcoin had a number of trend reversals. Some trends have been more prolonged than others. Institutional volume signals were able to confirm bullish and bearish market trends on July 17, July 24, August 22, and August 28. Major market trend reversals were spotted on July 12, July 24, August 11, and September 2. Institutional volume signals work best when applied with other RoninAi alerts.
To learn more about ways to improve trading based on technical analysis with RoninAi’s analytics read the following complete RoninAi Platform guide.