How efficient is the use of AI in trading?
Recently, there have been this buzz about the use AI in crypto ecosystem including trading. A report in Q3 of 2023 quoted by CoinGecko on X said trading bots generated 29k ETH in 3 months making it the most profit-efficient tool in crypto trading last year.
Coingecko tweet
Before then tho, there have been unofficial reports from Cointelegraph about the exploit of copy-trading within the crypto trading ecosystem detailing how users made over $400k from the product over a quarter. But the question I have been meaning to ask is how reliable are these elite traders, how efficient is their selection criteria and what happens if a follower trader wants to diversify elite traders? Could AI be programmed in form of bot to also do that? I guess some people would say yes tho but another deep thought is why AI and doesn't it seems these things are about to take our relevance out?
Going further, I looked into many copy-trading and bot copy-trading platforms and APIs to see which could offer the best results. I'm yet to find an efficiently tested one tho ran into a youtube video detailing how traders can smartly benefit from one pool different elite traders concept where a certain trader can trade with different elite traders within the same pool.
Hmmm!! crazy things happens in this space tho. 3 years ago, I wouldn't have imagined the concept of copy-trading let alone bot/AI copy-trading or any thing of this sort.
So, the ultimate question is: is this ultimately the future of trading?
Based on the most helpful WSO content, AI's efficiency in trading, particularly in the crypto ecosystem, has been a topic of much discussion. While the specific report from CoinGecko and the tweet you mentioned are not detailed in the context provided, there are some general insights that can be shared:
AI in Trading: AI and machine learning are increasingly being used in trading, including crypto trading. They can process vast amounts of data and execute trades at speeds and volumes unattainable by humans. This can lead to high efficiency and profitability, as suggested by the figures you mentioned regarding the trading bots generating 29k ETH.
Copy-Trading: Copy-trading allows users to mimic the trades of more experienced or "elite" traders. While this can be profitable, as indicated by the unofficial reports from Cointelegraph, it also carries risks. The reliability of these elite traders and the efficiency of their selection criteria can vary greatly.
Diversification and AI: In terms of diversifying across different elite traders, AI can indeed be programmed to follow multiple traders and manage the allocation of funds accordingly. This could potentially spread risk and increase the chances of capturing gains from different trading strategies.
AI's Impact on Relevance: The concern that AI might take away the relevance of human traders is valid. As AI becomes more sophisticated, it could automate many aspects of trading that were traditionally done by humans. However, there will likely always be a need for human oversight, intuition, and ethical considerations, which AI cannot replicate.
Future of Trading: Whether AI and bot copy-trading are the future of trading is still up for debate. While they offer many advantages, there are also challenges and risks, such as algorithmic errors or unexpected market conditions that AI may not handle well.
In conclusion, AI has the potential to significantly impact trading, making it more efficient in some aspects. However, the future of trading will likely involve a combination of AI and human expertise. As for finding the most efficient platform or API for copy-trading, it would require thorough research and testing, as the technology and strategies continue to evolve rapidly.
Sources: Will robots replace your consulting or financial career?, Thoughts on AI and the future of the job market?, AI in fundamental investing, https://www.wallstreetoasis.com/forum/hedge-fund/machine-learning-taking-over-hf-research-analyst-roles-in-near-future?customgpt=1, Is it worth pursuing a career in trading in 2017?
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