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A Whole New Crypto World: Magic Carpet AI

George Marangos-Gillks and Daniel Baeriswyl, Founder & Director of Magic Carpet AI 2019-06-14

In this article, we speak to George Marangos-Gillks and Daniel Baeriswyl, Co-Founders at Magic Carpet on how AI is being applied to investment strategies in the extremely volatile crypto market.

Please tell me about Magic Carpet AI.

Magic Carpet AI is a technology and research company that is pushing the boundaries of artificial intelligence applied to investment solutions. We deliver deep reinforcement portfolio management that results in stable and superior investment strategies in the extremely volatile crypto market.

We currently offer a decision support API for top ten crypto trading.

 


Magic Carpet’s Founding Team 2 years ago.
 

Are even the best traders driven by emotion?

Traders are human and humans run on emotion. Even the most removed rational trader will experience fear or overexcitement when trading.

 

How does A.I combat that and how does that translate to profitability?

AI decisions are based purely on a deep exploration of data. AI can crunch many billions more data points than the human brain can mathematically compute. Within this power lies predictive success.


 

Do you have any statistics to showcase why AI is perhaps more capable than humans at decision making?

AlphaGo Zero is a great example. It's the verion of Go trained by Deep Mind. It is self-taught and crushingly more powerful than any human player. It has come up with new strategies which the best human players are starting to copy.


 

How secure/reliable is A.I platforms when it comes to crypto trading?

AI has an interpretability problem. The decisions are so complex we struggle so know the thousands of inputs which cause it to trade X. This is the same problem for driverless cars. We don't actually know why it turns left or right on the motorway. AI systems thus rely on other controls. We have many tests like random trader test and bootstrap analysis which shows our AI has consistent and significant predictive power.


 

Using traditional methods, how long would it take to run a prediction? How does A.I speed up this process?
 

Traditional quant models take a lot of time to build and then refine. An AI engine takes even longer to build but once it is optimised the speed of innovation can be much quicker. We can feed in raw data and get an optimal trading strategy in 1 day. The AI simply masters the ideal strategy by using USD as it's reward function.

 

How does A.I ensure the accuracy of these predictions seeing that the crypto market is highly volatile and speculative?

We have many tests to prove the AI has predictive power. We are actively working on strategies which reduce the volatility of our returns hence giving investors a stable and more secure navigation through a volatile market.

 

Is the historical data required to run these predictions accessible?

Yes, the beauty of the crypto market is data is very open and accessible.


The strategy shows nearly 300% portfolio increase since mid December. The increase is shown in USD relative to top ten coins increase. Soure: Magic Carpet


 

How does A.I perform better than humans in outperforming the market?

Our best AI strategy has returned 290% more bitcoin since it started trading in mid December (BTC is our base currency which the AI accumulates).


 

How much faster is A.I compared to human traders and why is this crucial to algorithmic crypto investing?

Humans need to sleep but crypto markets are 24/7. Our AI never stops. It makes a trade decision every ten minutes - automatically rebalancing our portfolio to the optimum allocation.

 

How does A.I aid in sentiment analysis? Is this an edge in the crypto space?

Early results show this significantly boost predictive power from sentiment. The more unique data the happier our AI engine is.

 

How does A.I allow investors to focus on the value added work?

Once set up AI can do many diversified predictions for many different markets. It's a powerful and versatile engine. The speed at which we come up with strategies is greatly increased as we don't have to build each one by hand. We let the AI do all the hard work and it's very quick.

 

Does AI algorithmic trading replace the need for traders?

Yes we have a fully automated system. Of course you need to supervise an AI so we have a whole host of automated risk and performance controls. We sleep very easy at night knowing all of this is in place.



 

Fore more information on Magic Carpet AI, please contact: team@magic-carpet.ch.

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