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Recently, Coinbase announced (https://t.co/0rn55uLf3n) that they had recorded the first crypto asset exchange where both parties were AI. It's doubtful this was truly the first such transaction, even on the Coinbase platform. AI elements have been integrated into trading bots for quite some time now. It's likely that AI-based bots have been trading with each other before, but no one had informed the exchange’s management. So, this is more likely the first officially documented transaction.

Nonetheless, this is a significant milestone. AI is not just a predefined trading algorithm. AI bots can learn and adapt their trading strategies. They not only recognize chart patterns but also consider traders’ expectations from these patterns - things like fear, greed, and other psychological aspects of human traders. They can analyze the challenges traders face, assess how well they overcome them, and take into account the successes and failures of human traders.

The number of AI bots will undoubtedly increase, and their competitive advantages over standard bots and human traders will enable them to trade profitably. If we view the market as a competitive battleground where every gain comes at someone else's loss, then eventually there may be little room left for human traders. Just as high-frequency trading bots using APIs edged humans out of front-running and arbitrage, AI bots could outcompete humans in traditional trading.

On the other hand, AI is increasingly being developed as a tool to assist, not replace, human traders. AI-driven tools are being designed to help humans achieve their goals, including in trading. For example, in September, MEREXP Analytics launched an analytics tool called AI Swallow (https://merexp.com/swallow-demo-btc). It scans crypto-related news, reads it, and assesses its impact on market sentiment. Based on these evaluations, Swallow can help predict whether current news will drive up demand for cryptocurrencies or, conversely, cause demand to decrease and supply to increase.

The balance of supply and demand is the only real driver of price movement, and AI can evaluate the likelihood of changes in supply and demand based on market sentiment influenced by the news.

Up until now, only humans could do this. But humans can’t monitor and analyze news 24/7, whereas AI can. Additionally, humans tend to focus on news that aligns with their personal views, while AI is free from this cognitive bias, as well as from many others. AI won’t ignore news that do not fit its market outlook, and it evaluates all information objectively, without favoring its current market position. All in all, AI stands a much better chance of making well-balanced, rational decisions.

The question is, in the trading landscape of the future, will AI work for or against humans? When we read news about two AIs making a trade without human intervention, it’s easy to imagine that humans may no longer be needed in trading - AI will eventually push us out and take all the profits. But are such fears justified?

Does AI even need money or other assets like cryptocurrency? If it does, then there’s a chance AI will start extracting them from the market. But it's hard for me to imagine what AI would actually need them for. Money is a human invention, valued in human society, and it’s unlikely AI has any use for it. The same goes for cryptocurrencies.

Therefore, AI entering the crypto market is unlikely to act in its own interests. Moreover, AI doesn’t have interests - at least not yet. Current neural networks don’t possess any form of agency. This means that AI will act on behalf of humans, based on their commands and in their interests.

Thus, in trading, AI is more likely to be a tool rather than an autonomous player. Traders who use this tool will have a competitive edge at first. Then, as the market adapts, all active participants will start using AI, much like we all use computers or other electronic devices for trading today.

So, AI should be viewed as a friend and a helpful tool. We shouldn’t panic and shout, “It’s all over! AI will rob us all!” Nor should we abandon trading because we think there’s nothing left for humans. Instead, we should seek out new opportunities and solutions that are based on AI, learn how to use them, and apply them actively.

However, I do worry that in the near future, we might see a wave of fraudulent offers selling AI bots for trading. Distinguishing a worthwhile offer from a scam won’t always be easy. I can’t think of a universal strategy to help traders unfamiliar with AI separate the good from the bad and choose truly useful tools.

I have a few questions for traders.

• Have you already encountered any AI-powered trading tools (aside from the AI Swallow I mentioned)?
• Which of these tools have been useful, and which ones were just a waste of time and money?
• And generally, do you believe that AI can become a trader’s ally and assistant? Or do you fear it might destroy the type of trading we’re all used to and leave us without a source of income?

I will focus on this question because for me, the distinction between useful tools and those that are a waste of time and money often goes down to transparency, human control, compliance, etc.
If you use AI in trading, it's indeed a powerful tool for me, but like any tool, its value depends on how it is used in trading which we all know is very complex and complicated.

In my own opinion, the best I can see that is useful is for example a tool that verifies the algorithm, analysis, or pattern that you are using, and it will explain to you the uses of it, how it works, provide some use cases, etc.
A waste of time or money is the unrealistic result or promise, which we all know is very common right now in A.I., like guaranteeing correct answer or output but in reality, it's not.

Believe if or not this is a very old question. Do trading bots work?

The answer is yes and no. The technology is definitely getting better, and with more advanced bots things are improving. But the thing about markets is that they are not predictable, which means a trading bot (call it AI or not) can not predict it. They can only execute predefined scripts and act according to certain signs they have seen. like noticing an increased volume and number of new buy orders then predicting a coming pump, and consequently making a "buy" move for profit. But it can never predict that some whale is going to suddenly decide to dump a large sum on the market crashing the price of that asset. Hence that move ends up in a loss.

Here is the most dangerous thing about automation: the market may not be predictable but a computer program is. If its moves could be predicted, it could also be gamed....

Yes, and this is another manifestation of the emerging problem. If the program I use now can be predicted, AI will predict it and will be able to play against it successfully.

So, because of AI, it's becoming dangerous to use many existing bots for trading.

The answer to your question in the thread topic depends on how one utilized and perceived AI. In some aspects like data analysis, automation and risk management, AI can be seen as a friendly tool. In other aspects, AI is perceived as a threat to human jobs, market manipulation and causes over reliance making traders to be too relaxed with critical thinking skills. If you look at the latter aspects, it's a disadvantage for traders.

Although, AI development and deployment requires funding by human entities but they certainly have no personal uses for money and cryptocurrency. Not only money or crypto, they don't have any physical desires because they only exit in digital realm. Moreover, I don't see them replacing human entirely in every aspect since they rely on human provided resources. Of course, they can study and interact with financial markets but their actions will still be determined based on how they are being programmed.


Is there any difference between AI and trading bot in the first place? I do see them as interchangeable terms.

If it's ever the first time it's done, I think it's a great thing of an application because every tool should be used if it can be applied. For it to be trading is impressive, knowing that I am a trader.

Having market makers as AI would be helpful for an exchange. If it has become a great asset, it would be a fantastic tool for exchanges and everyone.

It can be an excellent tool for everyone and enhance the overall probability of winning.

You know, I keep thinking about this things about AI trading bots or whatever they're called. Usually AIs are depicted as a better version of humans, it's like amplifying the humans built-in abilities,  which gives them a higher advantage over normal humans, although there are still several ways it has been proven that no matter how smart an AI is, humans will always be better than AIs and I'll not delve into that right now.

My only concern is: if AIs are really amplified versions of humans, then surely, they're supposed to have discovered where humans are getting it wrong, since maybe they're considered to be in a better position to make trading choices and maybe probably correct those errors. So then I wonder, if this is so, then why exactly can't trading bots have  a 100% confidence that they'll get it right whenever they're trading, since they can be able to detect and fix those mistakes, thereby giving them at least a 100x advantage over the normal humans. So why the hell do they still need developing in order to get it right? Why?

I think you are not asking the right question, AI trading bots will be a contributing factor in trading and like AI applications, their ability to make decisions is still far from the human level and requires someone to bear the cost of those decisions.

The right question is how to reduce the misuse of this technology, because through these bots exchanges can make most traders lose or some VIP traders always win, this can be done now on scam platforms but AI will make it possible on all platforms.

You are absolutely right and that is the disadvantage of AI be it automation. They only acted towards the predefined instructions and they can't truly predicts and give exact future of what coin could be or what sum of amount to be purchased by people be it whale but it only gives signal or read the market when the action had already taken place then it send to users.

It's a friend for the traders who uses AI and got access to it and it's a foe for traditional traders like us, if AI could make technical analysis of the market within millisecond and decide what to do accordingly to the data available in the market for example the technical indicator and price action then we might be having big disadvantages here.
It'll be deadly combination if AI is combined with real time news, it could literally put order within just millisecond calling the exchange API if somehow there's really bad news relating to bitcoin out to the public.

but for now, AI seem to be not capable enough for that but eventually it will, the growth of AI has been exponential and I expect it to just get better.

On kucoin exchange, I have actually tried out one inbuilt bot that helps to carry out an automatic spot trading. The bot helps to buy when the price is low and sell when the price of the selected asset have move past the bought. I quite love the feature because it makes it easy for an investor to set the price they want to buy and sell and even while they are sleeping, the bot will automatically conclude the trade.

If AI can actually do better than humans in trading, that will be great, at least it's decision will not be biased or influenced by any form of emotion. Another bot which I have tried out is the inbuilt of bot bybit exchange, the bot only makes a suggestion of the coin or token you should trade and also points out the position to enter and I have actually tried to follow it's suggestion by entering a position for a token it recommended but I lost that trade.

Did those bots pretend to be AI based?

There are many differences. For instance,
- AI bots can learn from their own previous trades and modify their algorithms for opening and closing positions.
- AI bots can take into account natural language text information (for example, obtained from news).
- AI can create trading algorithms based on the textual descriptions of trader's needs.

There's is never a complete yes or no answer to all of your questions so far it concerns trading.

AI will always have its advantages and roles it can perfectly play in the trading industry but what we can never say if it will ever be better than a human trader because it obviously comes with its own flaws which cannot be undermined just like humans, but using it as an assistant can be a great idea, it can help you with gathering data a whole lot and that isn't even going to take you a lot of time as it would have if you were to.fetch those dats alone then with executions, there are times trades may not be rightly executed because i want to believe it will act like trading bots too.

Till date I have not used AI yet. I think own analyzes are better than AI. But I have heard from many people that they have made good profit by using AI bot for trading. Yes, I believe it because many people do copy trading on different exchangers.  A lot of profit can be made from this.
But I don't support AI because many fake AI are entering the market these days. That's why trading is not perfect even if it is done well. But I want to tell everyone that AI is always risky.

Just like companies that hire people, if for some reason AI would like to make humans work for it it would need an incentive that those workers would accept. In that case owning crypto would be perfect. Because i don't think that AI could ever set up a bank account, it just might hide cryptocurrencies to encrypted files. But that's pretty sci-fi. Other way would be manipulating humans. And if AI would be smarter than humans, we would never know what hit us, because we couldn't recognize sophisticated manipulation. In fact, if we were manipulated now by some high end AI, we wouldn't know.

This is something i've been thinking too. But i totally see a possibility that we want to build an AI as human like as possible, probably with organic material, so we could interact with it better and learn about ourselves while doing it. This would mean that at some point they probably would end up being just superior versions of us. They would have motives as humans would. They would be driven with code that gives them urges that suits us, written on their core. Similar to humans having coded DNA and instincts molded by our evolution.

Ai can be a great help for traders, but when it is used in correct capacity. Till date I haven't come across any AI based tool that can generate income for you by trading in the market. But AI can be useful for data analysis. AI can analyze historical data and patterns and can present you with summarized data points and statistical analysis. But the decision should still depend on the human trader. AI can indeed trigger certain actions if a pre-specified condition is fulfilled. So AI can indeed help in assisting us.

But I am not much in favor for giving AI the upper hand to take decision on our behalf. Probably we will see such capabilities of AI in near future because the AI models are training themselves to become better with time. But for now, I personally think, it's too risky for traders to completely rely on it.  

 

These AIs will not be launched for our use but for the institutions to grab traders' coins. If the AI is smart enough to make traders win, it won't be released for us becuase it's going to be released to be used against us.

AI won't just rob our jobs but also the money we have. They will be betting against us and eventually, those who hold will make money. Yet in the end, they get more coins with them. Yes, I think the fears can be justified already thinking of all these.

The market cannot be analyzed and predicted accurately so it is likely that bots will not catch accurate signals and this is a weakness.
When asked whether bots work or not, the answers may vary because there are people who use them and there are also those who don't.
For the reason that they work, it is clear that they work because they are designed for that, but talking about whether they are right or not is up to each person who uses them.

I prefer to minimize the misuse of technology and it will be dangerous for people who don't understand.
Bots or AI can be useful in their respective versions but do not guarantee that they can be used consistently.

The best way out would be to look at AI or how it operates, pick something that - you - yourself think is a nitpick that really can be useful, and do everything yourself ;D
That's my opinion, of course.

Push us out and take all the profits? And where do the profits go? AI is a human invention, an AI model works on algorithms and codes that we write and feed into them, they can't act by themselves or do things that aren't mentioned in those algorithms. Do you think an AI will create a wallet of its own, do trading, and shift the profits in that wallet itself even if it doesn't have this fed into it?

Are we talking about a movie or a fiction here? Come on! What we see in movies can't happen in real life, it's not like an engineer creates a robot, writes all its programs and algorithms, and then that robot starts acting by itself, kills its creator, and starts living by itself and conquering the whole world. AI models work the way we want them to, even if we program them to have interests or whatever, they will still not be able to cross us because they don't have a brain or thinking abilities.

If you consider yourself as a traditional trader then you won't be here but traditional traders can always change and learn new stuffs like this AI.

To simply got an access to it, shouldn't be enough for us to say that it is our ally but it is when we now use it and find out the results. AI's are like bots and there must be bots already who can do what you said there, so why won't the AI be, when I think they are more advanced but IMO it's still best to not rely on them because we might notice things that they can not and this should make our analysis more wider and more effective than what they are always offering.

At first I thought it was only a typo when you say disadvantage but after reading the text next to it, I think you really mean it, didn't you? But we still can look at the bright side, and that is it can only make things faster for us.

Trading bots have been there before. AI is an addition to that word and that's all. I think that in the world of trading, AI is a buzzword for bots to sell many of them and increase revenue. Is there an AI bot that can read news on Cointelegraph and make a decision according to that? As far as I am aware, there isn't such a bot.

I wouldn't be able to sleep at night if I were to use a bot for my trading. The only automation that I use is that I make an order and will wait for days, weeks and months to get my order filled.
For a few months, I was trading daily and I swear I had a huge anxiety that I hadn't faced before because I was trading with thousands of dollars, which was a lot of money for me during that time, especially when inflation wasn't as high as it's today and the purchasing power of USD was good.

For me, I only came across some AI tools in the exchanges, some of which were useful, while others were almost useless.

As for the question of whether AI can become an ally and assistant to the trader, I think that this is very possible, especially since AI does not have the emotions that always cause traders to lose, such as fear and greed, so I think that the presence of AI free of these emotions will be really helpful in making the right decisions for buying and selling.

As for the fears that AI may destroy trading, I do not find them justified and exaggerated, because what is the need for AI to trade without humans? In the end, humans are the ones who manage all these activities for their own benefit.

Even if AI is threatening to displace humans in a great range of activities, I do not think traders are at risk of being completely replaced, and this is because at the end AI has to use the same tools we use and be limited on its moves by the amount of money it has at its disposal, this by itself limits the potential of AI on this field, so human traders as long as they are good enough, should be able to trade alongside AI as they have done with bots for decades already.

There are just too many AI tools out there that I can't be damn bothered to try any single one of them lol. If the exchange has an integrated one then pretty much that's just going to be the one that I'd use and otherwise, I'd just not use them at all! I've tried a couple of them before, some free some paid but they're mostly for tabulating data and making some summarized analysis. I sure as hell would not let it control my trades though, I'd rather use trading bots (predefined actions) than let AI take care of it.

Definitely think it can be an ally. Just that, it's more of an assistant than the decision maker. It tallies the data, let me knows that the same thing I'm going to do right now was something I did the same last month and I fucked it up really badly, so they're just going to warn me.

AI Will be an ally when you know what trading is already and then just require some form of assistance, but AI will be a foe if you are a total stranger to trading and seeking for knowledge. It will be a foe because you may start depending on it too early and may never be able to get some kind of knowledge and learn something that you should know as a trader, you may skip those things because you have the idea that the AI can help you with those things. So, in conclusion, AI can be good for you when you already know what you are doing.

This is true because actually Al can help someone when they know what they are doing but if the trading knowledge they have is not good it will not give maximum results.
People think too much about easy things but they never know the negative impacts that are generated if knowledge is not put forward.
It is a must for traders to have trading knowledge and there is no reason for success in trading if they do not have good knowledge.

Something must be learned based on knowledge and people can engage in trading without having to use Al.
So when thinking that Al can help then it is better to help knowledge so that we have ideas in running trades.

Yes, this is what I indicated, as artificial intelligence does not need money and does not own it in the first place, so there must always be someone who moves it and gives it money and orders to implement them, so control will remain in the end for humans.

Unless what some science fiction movies predict comes true, which depict artificial intelligence becoming one day like humans, even in terms of its ability to obtain money, deposit it in banks, and spend it to buy some needs, this may happen in the distant future, but at the present time I do not imagine that.

I don't seem to understand this question because trading/investing bots are rampant these days. The one developed by Coinbase is not so particular, it is just an integration with their system in my opinion, but will still need efficient monitoring to avoid issues.

You would hardly find a useful trading bot and to be honest, I've not seen anyone with significant success for a long period.

Mark my words, AI or not, nothing can break the financial market because it is dynamic, otherwise, it will affect the whole world. If they can't achieve that before now after many tries, I know they can't achieve it now according to my market experience.

Here's why I've yet to come around using bots in my trades. I'm always scared hard with that mindset of something could happen while I'm not watching. I can set a pending order for buy or sell and it doesn't go beyond that; it won't be for more than a trade. That trade should be one that I'm pressed to take because of its nice setup which I would've spend some time monitoring and don't want to miss. Otherwise, I steer off charts. Als don't have emotions like I do, they only rely on data.

Another risk of trading bots or AI is their inability to understand context. No bot, no matter how sophisticated and advanced, can piece together news and events and relate it to the market. Basically it most likely does not look at the bigger picture and only does as told.
It’s definitely dangerous and pose a threat but I can also understand that this is the next best thing for some people. I would not recommend anyone to depend too much on trading bots without actual knowledge of how trading works. But it can help if you want to trade but just have not enough time to monitor closely. You would just have to acknowledge these risks if you really want to use it.

AI is like a superpower for the trades which brings a lot of potential utilities, TBH in my view trade execution with the trading AI bots can be dangerous as you know programs can be manipulated with programs, but if these tools are utilized in some like data analysis and decision making it can boost the efficiency of a trader to next level. Until you are the main person in charge while trading Ai is your superpower and you are a superhero.

If this power falls into the hands of bots only this can be like a movie villain haha I'm being so comical but yup in my perception it is dangerous to trade with the AI-automated bots as they are just programs and programs can be corrupted and bypassed/tricked to destroy your portfolio, in simple manipulations can be done on a simple trigger.

Here is the issue that we will encounter with these type of AI bots.

For one they use past events to predict future results. So after many analyses they can be helpful in entering or exiting a trade. However markets are very dynamic. For example the AI bot cannot predict some catastrophic event which might affect the markets like Covid did in 2020.

Even if these AI bots work. The more people use them, the less effective they will be. Because in an instant you will have thousands of people buying at once and it will cause the price to spike and then those that bought last will become bag holders. And then people will get smart and basically fade all these trades that these bots provide. If people will know that there will be a big spike due to thousands of people buying a certain crypto at a specific moment, they will fade all those moves and make money in reverse.

So if it works, it will work temporarily before too many people start to rely on them.

Also their lack of emotion matters because a human would be able to fear something, and while fear is not always good and could make someone get out, there is no logic in a robot/ai/bot whatever you want to call it that will make it stop, so if anything goes wrong then there is nothing wrong for it to keep losing.

I have seen plenty of bots that didn't work as it should, making people lose 20%+ in a single day and it didn't care, if it was kept on then it would have lost even more, it doesn't care at all. While I understand that it might get done in a way that it could be very good compared to a human when it comes to strategies, doesn't mean that it feels anything about making money neither, so it will always be a failure and we shouldn't really consider that as a good thing.

We need to realize that this is a bad thing and we can't make money with these tools without putting some human in it. Which is why I always say that even if you use one, follow it up yourself and do not go to sleep when it's on.

You are right in here. It could be useful and useless at some point. Using trading bots could promote fast and efficient trading transactions without emotions involved, but since we are dealing in an unpredictable market, trading without emotional and human intellectual intelligence will still end up useless. Trading is highly risky, that's why it needs to be taken with careful analysis and thorough planning so that it would create a positive outcome in the end.

Perhaps bot can not have the effectivity to analyze the market but at least, they can know when they can enter the market and what price they can start buying. When some people success in using the bot, other people will want to give it a try and that will make the situation is not good anymore because every people will want to make a profit using the bot.

And if more people also using the bot and make the competition becomes tighten so the dev will research and give newest update so the bot can works properly with the current situation. That will never ending ways for the developer because they must give the update to the bot  especially when the situation is always change. People also need to learn more to operate the bot because there will be many new feature that will be added by the dev.

AI bot needs to research more so that will work properly for people so testing the bot will be necessary before they launch the bot. We will see what will be with the AI bot later.