Candlestick Klines, moving averages, Chaikin money flow, rate of change, relative strength indicator…it’s a lot to take in. I don’t have very much experience trading Bitcoin and trading assets in general and this capstone project has been quite a ride learning all of these new terminologies and calculations. There are just so many different variables when deciding whether to buy or sell something. And this is all before even coming up with a trading strategy and determining how much to lose before selling and how much an asset should climb before buying.
I furiously write into my notebook that relative strength indicator is a form of exponential moving average and that it ‘normalizes noise’ on an oscillating graph to clarify larger trends. I also write and repeat to myself that the Chaikin money flow monitors accumulation and distribution of a stock. This project is really putting me through my paces in terms of coding ability, trading saviness, and financial literacy overall. And then…the unexpected.
The hammer drops and cryptocurrency markets tremble. Bitcoin has reneged on its intent to snatch up FTX.com because of the latter’s mishandling of customer funds amidst investigations. These two were the largest players in cryptocurrency exchange and now the exchange is on the brink of collapse. And in a blink of an eye, Bitcoin sinks by 15%. This just goes to show that even with a solid, sophisticated integration of financial indicators into a trading bot, there’s just not very much one can do to circumvent corporate politics and the innate irrationality of human nature.
Facetiously, I think to myself that the obvious answer is to integrate all of human psychology into a bot and scrape the news and integrate some advanced natural language processor and… But then, I realize there’s also no way to have foreseen how bad FTX’s financial situation was without insider information. Alas, this is the nature of trading something part of a brave new world, a nascent financial ecosystem where ‘value’ is assigned and taken away at the drop of a hat. Hopefully, I can take the lessons I learning coding our bot and trade some more stable securities.
