Beginners Best Practice Guide, Tools and Tips for Crypto Asset Prediction (Part 3 of 4)
(for those tuning in here, please start from part 1: This is a guide for learning to predict crypto asset movement using the Cindicator platform and other online resources)
Date questions ask when a certain event will happen. You can pick any date after the current date and before the deadline (stated in the question) or choose the “It won’t happen before [dd.mm.yyyy]” option. These questions can be about both traditional and crypto markets. If the event does not take place, all users who picked the latter will receive the maximum number of points available for the question, and everyone else loses the same number of points. If the event takes place before the deadline, the “won’t happen” analysts will be receive the maximum fine. Everyone else will get user_points = max.award — (|user_date — real_date|) / (time_interval * 0.35) * max.award * 2 or -max.award (where time_interval is a time period, usually in days, between the time of the question and the deadline of the question).
Date questions are fairly straightforward, and currently not in heavy rotation on the Cindicator platform. Answering these questions correctly requires intimate familiarity with market sentiment surrounding the asset. This usually involves a large, market-shifting development. Examples of this from the past include — interest rate adjustments, ETF approvals, mainnet launches, and adherence to roadmaps, in the case of crypto projects. Beginners should take particular note here — events in the world affect markets, and answering the Cindicator questions is a good way to get in the rhythm of checking news and other aggregator sources regularly to keep a finger on big happenings in assets you like to trade.
There is a definite way to approach these questions. As we can see from the helpdesk entry, first, we should consider whether or not this event will occur at all within the given time frame. If it is highly unlikely, one can easily secure the maximum points with the simple “It won’t happen before X date” option. Other than that, the formula is simple — the closer to the actual date, the higher the points awarded. You don’t get any special consideration or point scaling for your guess being early or late, as you can see from the formula — it is simply the absolute value of the number of days apart your guess is from the date of the event. In order to succeed at these questions, you need to be on top of financial news outlets on a daily basis, and follow the stories that pertain to overall market moves.
For crypto assets specifically, the two big areas to pay attention to are: The Big News, and Project Dates. Every period has its Big News— right now, it’s ETF approval, before it was asian crypto market regulation. Before that (and probably in the future), it was Mt. Gox. Follow the big stories, and develop knowledge of the behind the scenes players to assist in your answers. The other type of news that seems to have a large impact on crypto assets, are the project dates of specific assets — mainnet launches, rebranding, wallet release. All of these have had impact on asset performance in the past, and most likely will in the future. There are several good sites that provide this information, https://coinmarketcal.com/en/ being of of the most popular, the rest will be provided in the resource links at the end of the document.
Rank questions are a type of question where you need to put a number of options in a certain order, depending on the question. For example: arrange the following companies by the increase in their token price during the first three months after the token sale. Your goal is to try to predict the real ranking as closely as possible. We use several weighted metrics for calculating your score for a rank question: Levenshtein distance, (link all these) Hamming distance, and longest common substring. Generally speaking, the closer the order you make to the right answer, the more points you get, and vice versa. The maximum (positive and negative) points available are stated for each question and depend on the complexity of the question.
Rank questions are without a doubt the most difficult to answer on the Cindicator platform. There are several types — One type is the example mentioned in the documentation above — increase in token price between several crypto assets. Another common one are “dominance” questions, which have you put in order a list of assets by how much they will grow in overall market share. Others include questions about specific sectors of coin, such as Asian coins, or perhaps ERC-20 tokens against the rest of the market.
Once again, sentiment is key to answering these questions. You need to know about the price and development history of the assets, and how they are poised to fare in the larger picture going forward. These questions usually take place over a fairly wide time frame, requiring a deep understanding of multiple assets. You can attempt to answer them with quick research, but long term, daily market research and notes is what will truly put you over the top. It is worth pointing out — these questions usually have a fairly steep r:r curve and it’s easy to lose a significant number of points answering rank questions haphazardly. Here are a few tools of interest, including this one which lets you compare two assets and their market share over time in relation to one another.
Take a look at this example:
The bottom image shows coinmarketcap’s dominance chart. It is useful for visualizing the current state of market share, but not so much for how things move over time. During this week, BTC moves from — 51.2% to a high of 54.8%, settling at the end around 51.4%. During the same time, XRP has moved from 5.5–6.2%. The top image, from coindominancecharts.com shows BTC/XRP during this time frame. It isn’t super apparent on the larger scale of the CMC chart, but BTC went from being 10x the market cap of XRP, to only 8.2. The important thing to remember is — all of these parts are in motion. To answer, you need to get a sense of the movement of these assets in relation to one another for their immediate history, so you can construct what will probably occur in their future. You should probably keep an eye on the overall dominance charts, noting large shifts as they occur, so that you can refer back when one of these questions comes up on the platform. Large market shifts will also affect which project is on top, as the dominance is found by what percentage of the total market cap the market cap of each project constitutes, thus it is more likely that NEO overtake IOTA than ETH overtake BTC. Keep that in mind, look at roadmaps and answer according to who might snag up the most market cap.
Use the charts found on coindominance.com, particularly the “compare” page to overlay one to the other and quickly get a sense of which ones are largest. You can use this to construct a rough order, and then use your knowledge of the markets to adjust. Another important point — Coinmarketcap’s master chart of coin dominance only lists the most major players, excluding most of the small market cap coins.
A value question is a question where you need to predict a certain value: it can be a minimum or maximum price of an asset over a given time period, a hardcap for an upcoming ICO, the number of Bitcoin hardforks in the space of a year, maximum/minimum value etc.
To calculate points we use a special parameter called range. Range differs for each question and is defined by our analytical team to account for the complexity of the question. You can get from -75 to 75 points for your prediction: to get the maximum number of points, your prediction needs to be 100% accurate. If it falls by 0.35 of the range you’ll get 0 points and if it falls by 0.7 of the range or more a maximum fine of -75 points will be imposed.
Points = 75 — |real_value — user_value| / (range * 0.35) * 150
Value questions are probably the most simple type of question on the Cindicator platform. All they require is for you to enter a value. The types of questions cover a wide range. The ICO questions require a lot of research, and would be good for people who are picking up tokens in upcoming projects. Some of the most common are the minimum and maximum asset price questions. Usually these cover major assets, such as ETH, BTC, and a few others. Best advice here is to pay attention to the market long term, but also look at the historical value of the asset in question, https://athda.com is a good place to start. Take your understanding of the current market, and make an educated guess taking into consideration the previous all time high and low of the asset.
An open question is a question that needs to be answered with a free form text. You can be asked anything from naming the most promising upcoming token sale to providing your trading strategy under given market circumstances. Every open question has its own set of minimum and maximum number of characters its answer should contain. Please be polite and precise — all of your answers will be read by real people.
Currently all answers to open questions are manually reviewed and graded on a scale of 0–100% by Cindicator’s analytical department after the question is closed. The maximum positive points available are stated for each question. You will receive from zero to maximum points according to your grade: points = max_points * grade.
The open question is simple, and nothing to be scared of! Think of it as an opportunity to speak your mind, and hopefully gain some points. Analysts on the Cindicator platform come from a wide variety of backgrounds, with different understandings and insights into the cryptocurrency world. The crypto markets represent a new asset class, one that is struggling to be understood by users, developers and regulators alike. Do not be afraid to express new and experimental ideas!
There is no possibility of losing points here, so take some time, read up on the topic at hand, and give your feedback. The worst that can happen is you might not gain any points — in my experience it is a fun exercise, I have ended up learning some things, developed some new ideas, and generally scored pretty well. It doesn’t need to be a dissertation, just a reasonable, considered response.
One of our community members, @rexovas, had this to say regarding open questions asking about the success or failure of various projects:
“Amidst a sea of blockchain start-ups headed by similarly accomplished individuals, the proficiency of project leaders with respect to distributed ledger technology must be considered. As the space grows inundated with professionals hailing from nearly every industry, most have yet to prove their ability to adapt previous experience to the blockchain arena.If a team appears too good to be true, one must take extra precautions while performing due-diligence to ensure that the team actually consists of each listed member (in some instances, real individuals have been listed on team websites, despite having no knowledge of/affiliation with a project)
Additionally, one has to determine if there is really a need for a token/blockchain, as many companies/individuals have been taking advantage of the tech’s hype.”
The methods outlined here are designed to give you a basic way in which to produce input for the Cindicator platform, but there’s a lot more to learn as far as prediction and working to understand crypto and standard markets. Here are some suggestions that should help along the way:
Watch the charts of key assets, and those with frequent questions daily. The most important by far is BTC. You should look at BTC every day, sometimes multiple times a day. Check the 1 day chart, the 4 hour, see if the trend is up or down. Next check ETH. Between these two you will get a good feel for the day in the market. If you predict traditional assets, watch the Dow Jones, NASDAQ and other indexes. LTC, NEO and ADA are good secondaries to look at for crypto. Develop your own strategy and find the assets that inform your predicting.
Sentiment, especially for the crypto markets, is extremely important. BTC and the entire market can turn on a dime by way of a single tweet or news story. Traditional markets are less susceptible but still, anyone will tell you — watch the news. Pay attention to financial news, reddit, twitter, cryptopanic — any and every source of available information that can give you additional understanding of the assets you want to predict.
Be a hunter — watch the environment and behaviour of your prey. Learn it’s movements and habits intimately. You don’t bag deer by sleeping in the blind, and the same is true in trading. Work daily at learning more, and gaining a better understanding of the systems you wish to trade in.
Also, be aware there are times when the market is genuinely unsure. It’s these times when sentiment comes most fully into play. There are times where things are so uncertain, or a trend reversal is so on the edge of happening —that you might stop predicting. If you genuinely do not know, do not fill in an answer. In one instance in my own predicting, I was looking at the markets 24 hours before one of the historic BTC drops. I saw the uneasiness in the market from days of dropping volume and sideways movement. I couldn’t tell if we were on the verge of BTC popping up to 7000, or dumping below 6400. There was some upward movement in the altcoin market, but I didn’t trust the falling volume of BTC. Instead of filling in data for questions I was unsure of, I waited and watched. I gained 22 in monthly rank over the next 48 hours, and resumed predicting once I saw patterns I understood. Sometimes it can pay to wait for a trend to resolve, or for a large event to pass, in order to gain clarity on the direction of the market.
That does it for the prediction section of the Guide. I hope you have found helpful and informative. You might be wondering why on earth you would be learning to do all of this asset prediction, why you would spend your time on Cindicator, or paper trades or learning the markets at all? Please stay tuned and I will answer all of these questions in - Part 4 Beginners Best Practice Guide, Tools and Tips for Crypto Asset Prediction 2018: Enter the 36th Chamber :)
Glossary of Terms
“Market sentiment is the overall attitude of investors toward a particular security or financial market. Market sentiment is the feeling or tone of a market, or its crowd psychology, as revealed through the activity and price movement of the securities traded in that market. In broadest terms, rising prices would indicate bullish market sentiment, while falling prices would indicate bearish market sentiment.”
“Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company’s outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding. For example, if Cory’s Tequila Corporation (CTC) was trading at $20 per share and had a million shares outstanding, then the market capitalization would be $20 million ($20 x 1 million shares). It’s that simple.”
- Technical Analysis of Stock Trends, Tenth Edition Magee and Edwards
- Elliott Wave Principle: A Key to Market Behavior
- Candlestick Trading Bible
- https://athda.com — All time high data
- https://www.cryptotrader.tax/blog/the-ultimate-resource-list-for-crypto-traders-investors — THIS LIST IS INCREDIBLE! truly ultimate list!
- https://www.coinmarketcap.com/ — your new bible
- https://www.tensorcharts.com/ — excellent charting w/heat map functions
- https://coinfarm.online/index.asp — lot of useful information, including long/short option statistics on bitmex
- https://blockchainwhispers.com/bitmex-position-calculator/ — slightly off topic, useful for leveraged trading
- http://www.coindominancecharts.com/ — useful for rank questions
- http://data.bitcoinity.org/markets/books/USD# — Various order books
- https://agile-cliffs-23967.herokuapp.com/binance — Volume indicator for binance, leave it open for a second and data will start to accumulate
- https://www.tradingview.com — get a membership
- https://www.cryptopanic.com — best sentiment / news aggregator
- https://t.me/cindicator_chat — Cindicator Telegram link
- https://t.me/cryptiverse — Cryptiverse Chat Channel link
- https://www.hussmanfunds.com/content/comment/ — lots of good commentary, mostly on standard markets but even handed and insightful
- https://www.binance.vision/ — binance educational page
- https://stockcharts.com/school/doku.php?id=chart_school — lots of information on charts, terms etc.
- https://telegram.me/joinchat/AAppPT3cOnM48-Kqbm7FGg — traders library chat channel
- https://www.tradingview.com/ideas/indicator/ — tradingview explains indicators
- https://www.investopedia.com/articles/active-trading/041814/four-most-commonlyused-indicators-trend-trading.asp — another indicator explanation page