Optitoken has been designed as a hyper-deflationary crypto coin, which is supported by an automated tokenized portfolio. This portfolio relies on professional trading techniques and strategies to optimize token value. Some of the methods used include supply scarcity and strategic buy pressure. The Optitoken has the aim to optimize the adoption and use of digital currencies. The developers also hope to maximize the benefits of using it as the preferred mechanism for transferring value.
The History Of Algorithm Trading
Algorithm trading is used to execute large orders with the help of automated trading instructions. These instructions account for various things such as time, volume, and price. These algorithms were developed so that traders did not need to spend all their time watching the market.
In recent years, algo trading has been gaining popularity amongst retail and institutional traders. Using algorithms is not an attempt to grow profits, it merely cuts down on time, cost, and risk in executing an order.
The Problem With Automation
The main issue with automation is the lack of consistent safety measures. For instance, Knight Capital lost $440 million in 2012 when its automated trader accidentally sold stock it had bought a few days earlier.
The Optitoken project proposes to split actively traded portfolio into smaller groups with various fail-safe measures incorporated. A portion of the trading will then be left to human traders and rebalancing. Besides that, Optitoken will work with the exchange to implement protective measures.
The Problem With Machine Learning
Machine learning relies on various media events and social media for it to work. However, this has its flaws. For one, once an event becomes news and starts trending on social media, it is usually too late to take part in it. Experienced traders will tell you that chasing trends is not a wise strategy. Besides that, no machine exists today, which can weigh the importance of any particular news item.
There are no strict regulations today, which means that any headline can be manipulated to with ease. There are also social media accounts whose sole purpose is to sell propaganda. A single person on social media with multiple fake accounts can create counterfeit trends. As a result, they will have manipulated machine-learning algorithms.
Solution Proposed By OptiToken
The Optitoken solution is to engage in active research in areas particular to the crypto space. The eventual goal is to implement learning patterns based on crypto markets such as mining volumes, hashing power movements, transaction volumes, mempools, and much more.
The developers of this project believe that these are the critical numbers, which reveal the exact sentiment in the market. They can then be acted upon in small-size trades. These trades can be used to squeeze profits. The developers of this project believe that this trading only works well when done with small portions of the portfolio. That way, traders can hedge against the inherent risk. However, with time, they will still be able to benefit from a significant accumulation of profits over time.