Anomaly Index
What it means: The Anomaly Index is a proprietary CoinIQ calculation designed to alert you to unusual price or volume behaviour, moments when something in the market isn’t acting as it usually does. It combines several signals, such as sudden price jumps, sharp drops, or unexplained spikes in trading volume, to calculate how “abnormal” an asset’s activity is. The final score ranges from 0 to 100, making it easy to spot potential trouble or opportunity at a glance.
In plain terms: Imagine you’re driving and the dashboard light flashes, not always a disaster, but definitely worth checking. That’s what the Anomaly Score does for your investments: it flags moments when prices or trading volumes deviate from their normal rhythm.
Example:
- If a coin suddenly surges 30% in an hour with a matching spike in volume, its score might jump into the red, this could signal coordinated buying or sudden hype.
- If another asset sees rising volume but no price movement, it could mean large players are quietly repositioning.
- Conversely, a 50% drop in price would drive the score high, showing immediate risk.
Risk levels:
- 🟢 Low (0–25): All calm, markets behaving as expected.
- 🟡 Medium (26–40): Keep an eye out, early signs of irregular movement.
- 🔴 High (41–100): Something’s off, investigate immediately.
How to use it:
The Anomaly Index works best as an early warning system, not a standalone verdict. Combine it with metrics like rolling volatility and correlation to confirm whether the spike or drop is isolated or part of a broader pattern. A high anomaly score combined with rising volatility often signals market stress.
Watch for changes in the portfolio’s average anomaly score, too, a gentle uptick across holdings can mean background tension is building. Using historical anomaly scores is also powerful: recurring spikes in the same asset may reveal manipulation or cyclical behaviour.
When the score turns red, don’t panic, pause and investigate. Check whether news or market events justify the move. If not, tightening stop-losses or reducing exposure may be wise. Conversely, for traders with higher risk tolerance, early anomalies can also present opportunities, fresh momentum often precedes major market moves.