To stay ahead of the market, crypto traders use a variety of means: signals, expert analysis, and trading bots, among others. However, one particular tool that only a few top traders use for elite prediction is AI trading indicators.
Although a relatively new technology, it allows traders to make better-informed decisions backed by algorithmic data.
So, in this article, we’ll explore crypto AI indicators, how they work, and some of the best ones you can use. Without further ado, let’s dive in.
What is an AI Indicator?
An AI indicator is an automated system that predicts the price movement of a financial asset over a specific timeframe. It displays historical information about the value of a particular financial asset and a prediction of how it will likely be in a determined future period.
AI indicators are usually offered as open-source code scripts for traders to copy, configure, and use in their trading charts. So, they typically aren’t applications of their own. They are like extensions you plug into your preferred indicator apps like TradingView or MetaTrader and run.
AI trading indicators exist both in centralized and crypto or decentralized financial markets. That is, they are used in the forex, stocks, and crypto markets as trading tools. In this article, we’ll be focusing on their usage in the crypto space.
What is a Crypto AI Indicator?
A crypto AI indicator is a software program or code that extrapolates and predicts the price movements of cryptocurrencies over a specific period. They use advanced AI systems and specific technical indicators, such as moving averages and oscillators, to forecast how a cryptocurrency’s price will change over time.
Many crypto AI indicators are code-based plug-ins for indicator software like TradingView. So, these codes are usually written in PineScript, TradingView’s custom programming language.
However, some are provided as no-code software extensions for TradingView. So, they are easier to use and customize, even for trading newbies.
As aforementioned, crypto AI indicators utilize a combination of advanced AI technology and specific technical indicators to plot the possible price movements of a cryptocurrency on a chart.
Let’s take a deeper look at the technology that runs behind these crypto AI predictions.
How Do AI Trading Indicators Work?
AI indicators use a type of machine learning called logistic regression to predict the future price of a cryptocurrency. Logistic regression is an advanced statistical model that enables the indicator to make relatively or near-accurate assumptions about the value movements of a cryptocurrency.
Logistic regression is complex. Simply put, it involves using historical data and specific technical indicators or a combination of them, such as moving averages, Bollinger bands, and oscillators like the relative strength index (RSI), to extrapolate or plot out how the price of a crypto asset will progress over time.
It’s basically what advanced traders do, but this time, it’s done by AI. AI indicators aren’t perfect. They are continuously being trained on current market data and improving with every use. So, you have to consider this before you start using them.
Moreover, AI indicators predict price movements over short periods more accurately than long timeframes, making them a good tool for day trading.
Besides predicting prices, AI indicators provide trading signals and buy and sell alerts. This enables you to stay atop your crypto AI trading strategy and never miss a profitable opportunity.
In addition, to mitigate risk and maximize profits, these indicators also provide suitable stop loss and take profit levels for every trade they analyze. You can also customize them to match your trading strategy better, but you may need some programming knowledge.
Currently, TradingView AI indicators like LuxAlgo are available for mainstream use.
Benefits of AI Indicators
You should consider adding AI indicators to your repertoire of crypto AI trading tools for the following reasons.
Automation and efficiency
Al indicators automate the analysis of historical data and predict future price movements. This process saves you time and confirms your price speculations, enabling you to make quicker, more informed decisions.
Al indicators leverage advanced statistical models and machine learning to analyze vast data. Thus, they provide you with data-driven insights that may not be easily discernible through traditional analysis methods.
Objective trading approach
Furthermore, crypto AI indicators offer an objective approach to trading. Their predictions are not based on any underlying bias, making them reliable in terms of algorithmic efficiency.
Continuous learning and improvement
Perhaps the most underrated advantage of AI indicators is that they can learn and improve over time. This is possible because of the machine learning technology behind them, increasing their prediction accuracy after every use.
Cons of Crypto AI Indicators
As useful as crypto AI indicators are, they also have certain disadvantages. Let’s talk about them below.
Limited accuracy in volatile markets
As aforementioned, crypto AI indicators are still a work in progress and struggle to provide accurate predictions in highly volatile market conditions, especially in the short-term. So, sudden and unpredictable market movements can challenge the effectiveness of these indicators.
Dependency on historical data
Crypto AI indicators are highly dependent on historical data or previous price movements. So, if market conditions change significantly or the indicator encounters unforeseen events, its crypto AI predictions may become less reliable.
Complexity and overfitting
TradingView AI Trading indicators often require some programming knowledge to customize and integrate into your trading software. Due to constant backtesting with historical data that sometimes may not be indicative of future price trends, AI indicators face the risk of being overfitted.
Examples of AI Indicators
Here are some examples of popular AI indicators in use today:
- ORB Algo
- Crypticorn’s Price Prediction Dashboard
LuxAlgo is a popular AI trading indicator on TradingView. Although they can work for stock trading, they are primarily optimized for crypto AI trading.
LuxAlgo uses a unique machine learning technology called Gaussian Process Regression that enables the AI to accurately predict the prices of cryptocurrencies. This AI tool, alongside a couple of the platform’s other trading tools, is available at subscription fees ranging from $29.99 to $59.99
2. ORB Algo
The ORB Algo indicator is an AI tool developed by Fluxchart. It uses a particular trading strategy called “Opening Range Breakout” to predict market trends that are already in session. It analyzes a market session for 30 minutes and generates an entry and exit signal for the next minute of trading, enabling users to scalp trade with high volumes.
The main disadvantage of this trading indicator is that it is expensive as irs base plan starts at $59.99.
3. Crypticorn’s Price Prediction Dashboard— More than just an AI Indicator
Crypticorn offers an insane AI price prediction dashboard with all the advanced trading features you need and more. This dashboard is the perfect addition to any crypto day trader’s arsenal.
The AI is programmed with advanced technology that enables it to scan insane volumes of historical data and utilize multiple trading indicators to predict the prices of major cryptocurrencies for the next 6 hours.
Furthermore, Crypticorn’s dashboard also provides ]board provides custom signals for you, providing the best entry and exit points for you to trade with. The dashboard also contains live sentiment AI analysis and recent news, tweets, and updates relevant to the crypto pair you’re trading.
You can also connect it to your preferred crypto exchange and trade directly from the platform without switching tabs. The platform’s newbie-friendly and highly interactive interface makes this process considerably easy.
To access this incredible tool, all you need to do is buy $AIC tokens, and you have lifetime access.
AI indicators enable you to get accurate price predictions using indicators of your choice. This can solidify your trading decisions and make the most even from volatile markets. In this article, we’ve also explored the cons of these indicators so you can make informed decisions when purchasing one.
What is the best AI indicator?
The best AI indicator at the moment is Crypticorn’s AI Price Prediction tool. Its collection of valuable tools is the best you can find on the market today.
What indicator do most traders use?
Most traders use TradingView to access live charts and apply different technical indicators.
Which trading indicator is the most accurate?
Moving averages and oscillators are the most commonly used and accurate trading indicators today.