What are signal variants?

Updated 10 months ago by CoinFi

A signal variant is a configuration of data we backtest to find price correlations. CoinFi data scientists test many variants of a signal to find the best predictor of price.

For instance, if our hypothesis is “ETH moving into (or out of) exchanges will be a leading predictor of ETH price”, we might express the variants as such:

  • Number of ETH transactions moving into exchanges in the last x hours will predict a price drop in the next x hours.
  • Number of ETH transactions larger than x ETH moving out of exchanges in the last x hours will predict a price increase in the next x hours
  • Number of distinct wallets moving ETH into an exchange in last x  minutes will predict a price increase in the next x minutes

In addition, all of the above can be qualified further, for instance:

  • Direction of transaction (into or out of exchange)
  • Characteristics of exchange (has fiat pairs, has Tether pairs, etc)

It's common for our data scientists to test hundreds of variants just to find one trading signal that meets our high bar for shipping to our CoinFi Trading Signals members. For example, we tested over 250 variants for our ETH trading signal.

Learn how our data scientists test many variants rapidly using our proprietary backtesting tool called Signal Factory.


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