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Optimized Cryptocurrency Trading Algorithms

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Aman Ali

I have designed two algorithms to maximize profits for an investor who is planning to invest in an ICO. This can be applied to a scenario where the investor is planning to invest through an exchange company that has a dashboard interface for the user.

Algorithm 1:

Motivation:

The primary motivation behind this algorithm is the graph analysis concept I have read in my high school calculus. I will now explain the algorithm with a simple graph.

Explanation:

Let us assume there are 2 companies named “1” and “2”. This is the setup I would like to have on the dashboard. Let the horizontal axis represent Time, and the vertical axis represents Value. There are three time periods on this graph. They are:

1) Period till ‘A’.

2) The period from ‘A’ to ‘B’.

3) Period Beyond ‘B’.

Now let us say we have a customer “John” who has created an account in our company. Now John wants to invest his money. Let us say for example that he is planning to invest 10$. My whole aim is for John to have maximum profits for his investment. So we will first suggest John to invest his 10$ to invest in company “2”. Now we will have the forecasting done at the backend and we will have the comparison of the values. There will be a time when this trend would reverse. I am labeling that point ‘A’. Now, we will send an email or a text alert to John advising him to invest in company “1” now. Then we will wait till the trend reverses once again (Point ‘B’). We will now send an alert so that John can invest his money in company “2” now.

Implementation:

We can have this comparison done on the dashboard. With the sentiment analysis of the ICO’s hype on its twitter page and the data given to us by the ICO, we can have this done. Text alerts and email services can be automated as and when we have a trend change. In my explanation, I have decided to have the comparison of 2 ICOs. But we can give the user/investor the choice to select the ICO based on their interests.

Advantage:

If implemented properly, an investor will always have profits. Since people are investing in the ICO, the ICO’s market value will increase and it will gain popularity. So, we are ensuring that the primary needs of both the parties are met.

Algorithm 2:

Motivation:

The weighted knapsack problem is the primary motivation behind this algorithm. I will give a small example of the weighted knapsack problem. Let us say we have to fill a knapsack that can fit a maximum of 10kgs weight with the items. Each item has a value. So we need to fill the items in such a way that we have the maximum combined value of them while not crossing the 10kg limit. I will now explain my algorithm.

Explanation:

In this algorithm, let us assume that we have an investor. We will suggest to him a way to invest so that he will get the maximum return on investment.

Now let us define an equation,

A*x + B*y + C*z = I

Where [A, B, C] are the number of tokens of three ICOs respectively that will be purchased by the investor and [x, y, z] are the values of these tokens. Let ‘I’ be the total money the investor is planning to invest.

Let A*X + B*Y + C*Z = O

Where [X, Y, Z] are the appreciated values of the tokens and “O” is the return on investment.

Now, we will suggest the above combination in such a way that when the price of the three tokens appreciates we get the maximum return on investment.

Implementation:

We can first give the investor the option to choose the number of ICOs he is planning to invest in. Once we have that number as the number, then we can give him the optimum combination for investing. In case the investor has any doubts regarding the combination, then we can get him in contact with the investment advisor of our company to help him decide. This combination can be selected with the help of the ICO data from our database. Our database must have the predicted future price of the tokens. This prediction can be achieved by the same way as I have mentioned in the implementation of my first algorithm i.e with the sentiment analysis of the ICO’s hype on its Twitter page and the data given to us by the ICO.

The following quote was my inspiration for writing this article:

“So many academics forget that our goal, as a profession, is *not* to publish papers. It’s to change the world.”~Emin Gün Sirer

Thank you for reading my article.

If you have any questions, please feel free to send me an email. You can also contact me via Linkedin. You can also follow me on Twitter.

In order to get started with Blockchain read my article published on Hackernoon

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