A Guide for Traders on Using AI to Profit from the Market Crash

The global financial markets are in crisis right now due to a perfect storm of supply chain issues, geopolitical upheaval and soaring inflation leading to a significant slowdown in global economic growth.

To combat rising inflation the banks raised interest rates, which has depressed consumer spending and scared investors leading to sell-offs and reduced investment. In addition, the aftershocks of the COVID-19  pandemic are still being felt in the global supply chain, with delays and shortages causing reduced economic activity and driving up prices. Compounding the problem are continued geopolitical instability in Eastern Europe and fresh tensions in the Middle East.

In this post we’ll look at how this economic slowdown is impacting traders, and how they can profit in this turbulent market.

How the Crash Is Impacting the Markets

One of the main ways the market issue is upending the markets is by making investors avoid riskier assets and turn to safe haven investments.

Consumer spending and confidence are taking a hit, and traders are seeing stock portfolios shrink, with major losses for those most invested in speculative stocks.

We have seen a decline of stock market verticals most sensitive to economic turbulence like technology and industrials. The drop is driven by fears that corporate profits will tank amid reduced consumer spending and increased borrowing costs. By re-weighting their portfolios to more defensive stock verticals like energy and healthcare, traders can mitigate their losses.

Equally, when it comes to forex trading, we have seen major market volatility, which offers both risk and opportunity to investors. Investment in safe haven currencies with more aggressive monetary policies will help traders ride out the storm.

Cryptocurrencies, considered to be among the most high risk assets, are very vulnerable in periods of economic upheaval. They have also been dropping in value, with leading coins like Bitcoin and Ethereum falling sharply. Traders with a diverse portfolio that balances crypto with safe haven assets will be better able to mitigate the risk to their capital.

When it comes to commodities, negative market sentiment and data have led to price fluctuations for agricultural products and precious metals, though energy products like crude oil and natural gas have risen in value due to disruptions to the supply chain caused by geopolitical tensions. As a result, many commodity traders are choosing to go long on energy assets.

Investment Strategy in a Market Crash

A market crash can have a huge impact on the jobs market and the cost of living, with rising inflation severely impacting living standards, reducing levels of disposable income.

Traders need to reassess their strategies, placing a greater focus on risk management, and diversification as well as investing more heavily in less volatile safe haven assets. In addition, an emphasis on long term investment goals is essential.

How Traders Can Profit from a Crash Using AI Bots

In periods of extreme uncertainty and volatility, manual trading strategies can often be insufficient, particularly for traders, with other demands on their time.  This is where AI comes in and it is rapidly changing the game for traders of all types. 

There are multiple advantages to using AI bots, with the obvious being their speed and efficiency, as well as their ability to allow for hands-off trading, freeing the trader up for other things. During a market crash, when it is vital to receive up-to-the-minute information an automated trading system can instantly execute trades,  based on a wealth of real-time market data, processed and analyzed at lightning speed. This means traders can mitigate losses and exploit emerging opportunities reacting to shifting market conditions, without delay, even when they are away from their screen.

An AI won’t panic if the asset it is trading plummets in value. It also never needs to sleep and can process data 24 hours a day, from a huge array of sources simultaneously. AIs can analyze historical price data, financial reports, economic news, social media sentiment and more to help traders make informed, strategic decisions.   

Taking advantage of rapid developments in AI, retail traders can use machine-learning technology to identify patterns that may be too subtle for a human to catch, forecasting price movements in volatile markets with a high level of precision. They can predict trends and prepare for future market fluctuation with exceptional accuracy.

When a Regular AI Bot Is Not the Answer

The challenge for the average trader is that most institutional-grade AI-based trading bots are either prohibitively expensive, or they require coding knowledge to program the algorithm with chosen trading strategies and risk parameters.

Here at Algosone.ai, our free, regulated AI-based platform is leading the pack with state-of-the-art, proprietary deep- learning algorithms that are fully automated, requiring no trading knowledge or coding ability. The AlgosOne  AI model does everything, from choosing assets and trade sizes to deciding when to enter and exit positions. The system is constantly monitoring the markets, adjusting trading strategies and risk parameters to mitigate exposure, which is essential during periods of market upheaval.

Our AI model’s advanced adaptive learning capabilities mean it can learn from past outcomes and historic data, becoming increasingly effective over time at navigating market instability and optimizing trade performance. While many manual traders have been panic trading and losing large sums as the market tanked, AlgosOne is continuing to consistently make money for users, and meeting projected profit percentages, with a steady trade success rate of over 80%.

Times of market upheaval can be challenging, even for experienced traders, but using an AI platform like AlgosOne can boost trading performance and generate a reliable passive income, whichever direction the market is moving. As AI capabilities continue to develop, the technology will gain a greater foothold in the financial arena, providing valuable tools that will enable traders to generate revenues in any market conditions.

To learn more about the role of AI in finance, trading strategies for both bear and bull markets, developments in blockchain technology, cryptocurrencies and more, browse the AlgosOne blog.