[Major Enhancement] Machine Learning Models 3.0: Adaptive Stop Loss
Last Updated on September 11, 2019 by admin
Crypto-ML is pleased to announce a major upgrade to the machine learning models. This enhancement adds an adaptive stop loss, resulting in significantly enhanced overall trade results. Learn more about Stop Losses.
As a brief history of the machine learning technology behind Crypto-ML, here is a summary of the model releases:
- Crypto-ML 1.0 models brought intelligent oscillating technology that consumes large amounts of data to dynamically update based on market condition.
- Crypto-ML 2.0 added a separate mechanism to determine profit capture level. Rather than waiting to close profitable positions, it independently and dynamically seeks when to exit profitable positions.
- Crypto-ML 3.0 adds an independent, dynamic stop loss mechanism to exit positions before they move too far against the traders.
While 1.0 was initially envisioned to have “all of the answers,” it’s proven best to separate out the machine learning into three separate decision makers:
- When to open (Model 1.0)
- When to take profit (Model 2.0)
- When to cut losses (Model 3.0)
Crypto-ML 3.0 Release Notes
- Adaptive stop loss: Models will now close positions based on a new programmatic mechanism designed to seek optimal stop loss levels.
- Models in scope: All long models have been upgraded to 3.0 and will now issue “SELL” signals after the stop loss level is hit. The short model will be upgraded as soon as a close is called.
- Stop loss guidance: While positions will be closed based on the adaptive stop loss, the new machine learning feature will also be able to provide guidance as to how to set your stop losses in case you manually open and close your positions.
- Performance: General enhancements based on recent market condition learnings
Crypto-ML 3.0 FAQ
1. Will positions close sooner than before?
In general, yes, losing trades will close sooner. While losses are expected, the more these can be controlled, the better.
2. Why are stop losses set at different levels and why do they change?
It is common that immediately after a trade is opened, it will move into a negative position before turning positive. This is where stop losses need to be carefully managed. If the stop loss is too tight, you may be stopped out of a trade before it turns positive. As such, finding the right point for a stop loss is challenging. This is where we can let the power of machine learning help guide us, especially as market conditions evolve.
3. Will there be trading losses?
Yes. Crypto-ML (and probably any other system) has and will issue losses. As long as profits run and losses are managed, results will be positive. Crypto-ML has a solid trade history of capturing big runs. But there are also losses. With 3.0, these losses will be further minimized.
4. Will the stop loss levels be published?
Yes. Stop losses are now published on the Member Dashboard and the Daily Updates. You can use these numbers as guidance for setting your stop losses but you should consider your own personal risk tolerance when opening any trade.
5. Should I manually set stop losses?
In general, yes. When you open a new position, you should set a stop loss. You can either set your stop loss based on your own risk tolerance or you can follow guidance published by Crypto-ML 3.0 on the Member Dashboard.
If you are on the Auto Trade membership, Crypto-ML will automatically close your position after the stop loss is hit.
6. Will stop loss guidance change?
Yes, but not while a position is opened. Crypto-ML stop losses are dynamic, but they are created in a way that they will be fixed while a position is open. So you can set your open and stop orders simultaneously.
The dynamic stop loss guidance will only update if the position is closed. In this way, it issues an optimal stop loss before the next trade open.
7. What memberships gain the 3.0 benefit?
Since stop losses are related to trading, these memberships will see stop loss information:
8. Will profit-taking guidance (Crypto-ML 2.0) be published?
No. Unlike stop losses, profit taking is continuously updated while positions are open. This is critical because positions need to be allowed to run. If the models preemptively call a profit taking point, there is a good chance extreme runs will be missed.
9. What are the risks of stop losses?
There are two key risks associated with stop losses. First, trades may close for a greater loss than your stop point. And given the strong volatility of cryptocurrency, there is a particular risk related to exceeding stops.
Second, you may be stopped out of a trade that ultimately goes positive. That means after the trade opens, it may dip a bit and then begin moving in your favor. If the stop is too tight, it will trigger and close your trade giving you a loss rather than a win.
Questions and Comments
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