The rise of the cryptocurrency market has seen traders deploy a wide array of strategies, all in the effort to squeeze some profits from the volatile yet burgeoning marketplace. Automated crypto trading has since emerged as a preferred dealing module for professional and novice traders.
Automated crypto trading is simply using software programs or trading bots to trade various cryptocurrencies in the market. At the heart of automated cryptos dealing, trading bots deploy algorithms to scan the market for dealing opportunities 24/7.
How Trading with Bots Works
Crypto trading bots are simply software programs that deploy a wide array of strategies and technologies to scan the market for dealing opportunities and capitalize on them.
Trading bots, in automated trading, are agile and nimble, thus able to watch various markets or cryptocurrencies in search of profit gain opportunities. Once an opportunity is identified, the bots execute buy or sell orders on behalf of traders, giving rise to automated trading.
Different types of cryptocurrency bots are designed to take advantage of volatile market situations in the highly volatile cryptocurrency market. Some bots are good at technical analysis, while others are effective in market fundamentals. However, both are designed to analyze and automatically execute trades on behalf of traders.
Top Reasons to Choose Automated Crypto Trading
Gone are the times when traders had to spend hours on the screen and exchange platforms trying to identify perfect patterns. By automated crypto trading, they take a back seat as trading bots come with programmed methods that allow them to monitor the market and conduct trades on their behalf. In this case, a trader is always in the market 24/7 using programmed bot software.
After a trade is opened, the bot will watch it and see if it will live up to expectations and generate the desired profits. Should a trade go wrong, trading bots can also deploy stop-loss orders that minimize the number of losses incurred. Likewise, some automated exchange tools can trade various cryptocurrency pairs simultaneously and on multiple exchanges.
Traders can’t watch and analyze hundreds of cryptocurrencies at a go. However, with automated crypto trading, most dealing bots offer support to hundreds of cryptocurrencies. Therefore traders end up having the upper hand as bots scan all the cryptocurrencies all in the effort to identify the ones likely to generate sufficient profits at any given time.
Automating the process of exchanging cryptocurrencies goes a long way in simplifying the process of processing live market data. In this case, traders don’t have to spend their time reading the news and trying to interpret it. Trading bots are known to carry out detailed fundamental and technical analyses to identify profitable opportunities.
Automated crypto trading goes a long way in averting the fear and emotion of dealing that has seen most people lose a significant amount of money in the heavily volatile markets. However, trading bots work based on automated trading rules while leveraging various technical indicators and statistical arbitrage.
Automated crypto trading is simply an emotionless form of trading given programmed trading bots, among other tools. Likewise, trading tends to be more profitable, given the reduced risk of psychological stress and mistakes that occur on emotions.
What To Consider When Choosing The Right Trading Bot
Crypto trading bots make exchange decisions by monitoring price movements and reacting to pre-programmed rules. Some of the data that trading bots use to generate buy or sell signals include cryptocurrency volume, oversold or overbought state and an order price and time.
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Let’s look at some things to consider when selecting a Bitcoin trading bot.
- Reliability
Reliability is an essential factor to consider when selecting a Bitcoin trading bot. You want to pay for a crypto exchange that you can rely on all the time. The bot must effectively survey the cryptocurrency market and identify high probability opportunities capable of generating optimum returns.
In addition, the Bitcoin trading bot should not give downtime any chance, as profitable trades can disappear at any time. Again, it must be up and running as long as the market is open, focused on scanning the market for trading opportunities.
While there is no way to know if a bot is reliable, feedback from other users via reviews can provide clear insights.
- Transparency
You want to trade with a Bitcoin trading bot with well-defined exchange processes that are easy to study and understand. The algorithms to generate high probability trading opportunities should be readily available and widely known to all users.
Likewise, the crypto trading bot has to make it straightforward to comprehend how it identifies trading opportunities and how it makes profits. By checking reviews online, you can determine the transparency level of any top Bitcoin trading crypto in the market.
- Security
Any top Bitcoin trading bot should adhere to best security practices that ensure clients’ capital is protected. When choosing a bot, you want to go with a bot that does not require full access to your money or account. This way, you will be able to limit the damage in case something goes wrong while trading.
- Price
Price is of the greatest priority when selecting a crypto trading bot. The perfect one must show balance when it comes to the fee charged to identify and execute trades on behalf of clients. Going with a cheap bot might necessarily not cut it. Similarly, a cheap bot might not deliver the best gains.
Any top crypto trading bot should at least have its claims in the form of price aligned with its win rates. It should be able to timely cut losses in case of failing trades. Also, it must not be biased in charging over the top of winning trades.
- Trading Strategies
A Bitcoin trading bot’s exchange strategies should ideally align with your trading goals. If you are a long-term trader, then the bot should be able to deploy long-term strategies such as position trading. The best bot for short-term traders should be effective in scalping or swing trading.