The logic of quantitative analysis in the currency circle is actually very simple. It mainly predicts currency prices through various indicators and tests its effectiveness through historical data. This is also a quantitative analysis method used by many people. Based on our many years of experience, we can simply summarize the following points: 1. The price can be predicted, but the rise and fall cannot be predicted. 2. Indicators such as volatility, amplitude, and turnover rate can predict the rise and fall of the price. 3. Historical trends can verify whether the indicator is correct. Effective 4. When there is a problem with the indicator, the indicator must be corrected in time. 5. If the indicator is used for prediction, the loss must be stopped in time when an error occurs.
1. Prices can be predicted, but rises and falls cannot.
In our quantitative analysis system, we hope to look at prices and rises and falls separately, and not use price rises and falls to judge trends. Because many people have watched too much about the rise and fall of currency prices, but have overlooked one issue: the reasons for currency price declines and increases are the same, which are determined by the relationship between supply and demand. For example, the reason why Bitcoin plummeted in 2017 was mainly because when Bitcoin production was reduced in March 2017, a large number of low-priced chips appeared on the market, which caused the currency price to fall. When Bitcoin surged in March 2018, a large number of high-priced chips appeared on the market, causing the currency price to rise. Therefore, in the quantitative analysis system, we do not want to use the rise and fall of currency prices as the basis for judging market trends, but prefer to use data to analyze the reasons behind currency price trends.
2. Indicators such as volatility, amplitude, and turnover rate can predict price rises and falls.
Indicators such as volatility, amplitude, and turnover rate are important tools for predicting price rises and falls. Volatility can determine the market's recognition of the current price, amplitude can determine the market's recognition of the current price, and turnover rate is used to reflect the market's recognition of the current price. An important indicator of market capital activity and willingness to trade. Predicting price rises and falls through indicators such as volatility, amplitude, turnover rate, etc. is not inconsistent with predicting price trends based on fundamental analysis, because they can complement each other. Therefore, when we use volatility, amplitude, turnover rate and other indicators to predict the rise and fall of currency prices, we generally do not use one indicator alone.
3. Historical trends can verify whether the indicators are valid.
As we all know, predicting prices is a difficult thing, and it is even more difficult to accurately predict the rise and fall of currency prices. The reason why many people cannot predict the trend of currency prices is because of the lack of historical data. Analysis and conclusion. Therefore, when we use various indicators to make predictions, we need to find patterns in historical trends and verify the effectiveness of indicators through historical trends. For example: we can verify its effectiveness through the historical performance of BTC prices. If the BTC price has risen or fallen more than 5 times in the past 30 days, it means that the indicator's prediction of price rises and falls is valid. of.
4. If you use indicators to make predictions, you must stop losses promptly when errors occur.
The above are some basic logic and methods for quantitative analysis of the currency circle. We do quantitative analysis mainly to predict currency prices, so we also need to use some indicators, such as the volatility, amplitude, turnover rate and other indicators we use. When using these indicators for prediction, we need to consider the relationship between these indicators and currency prices, as well as the problems of these indicators themselves. For example, when we use volatility to make predictions, if the volatility is too low, we need to consider adjusting the calculation method of volatility, or use other indicators to make up for the losses caused by too low volatility; when we use amplitude and swap When making predictions based on hand rate, if the amplitude and turnover rate are too large, we need to consider correcting the calculation method of amplitude and turnover rate; if we use moving averages to make predictions, when there is a problem with the moving average, we must promptly correct the moving average. Of course, in addition to these indicators, many other indicators can be used for prediction.