How To Stay Ahead With Crypto Trading Bots - Reading time: about 4 minutes
Using trading bots for your crypto trading can be fun and, at the same time, profitable—if you get it right. Many experienced crypto traders find bots indispensable in their quest to beat the markets, and can attest to the success that these trading solutions provide.
Combined with thorough market analysis, informed research, and a deep level of industry knowledge, bots can come in handy to help crypto traders—both new and old—make optimal trading decisions.
These bots, which enable human traders to execute automated trading, are extremely vital in the crypto space where several factors—including news and crowd psychology—control the market. Traders only need to perform more of a monitor-like function to ensure that the bot is running properly and trades are executed as planned.
What are trading bots?
Trading bots are basically algorithms that serve to carry out thousands of complex calculations in quick succession, playing a key role in the investment and trading process. Programmed to follow a series of steps to complete given tasks, like making trading decisions when certain parameters have been met, algorithms classify market data into increasing and decreasing prices for traders to make informed market-related decisions. Algorithmic trading is used in most capital markets.
In the crypto space, bots have a set of built-in conditions related to the current market situation. These help traders understand the market better: trends and corrections, lateral price consolidations, and what trading strategy to deploy, e.g. dollar-cost averaging (DCA) or grid trading. For trading platforms, the deployment of these bots tends to help bring improvement to market quality and to ensure liquidity in their markets, making it a win-win for both traders and exchanges.
Why use crypto trading bots?
The main purpose of trading bots—which are now becoming more accessible to individual investors, particularly in the crypto space—is to help traders access the market probabilities in the trading options before them.
Advantages of trading bots
On the upside, using bots can benefit traders in the following ways:
Trading bots create buy and sell orders in accordance with the conditions set by the trader. The bot trades assets strategically in tandem with market situations and based on historical data.
Trading bots are quite efficient and accurate in their dealings. They operate with lightning speed in their execution of trades. In a space where the speed with which one buys or sells an asset determines the profit a trader is likely to make, bots help to avoid delays or the likelihood of committing errors that are common to humans.
Trading bots are active around the clock. Since it is impossible for any trader to stay up monitoring the market and their trades all day, trading bots’ ability to function without downtime makes them a perfect choice to handle relevant activities. Along the line, traders make money on price fluctuations, gains on upswings, and savings on lows.
Unlike humans, bots are emotionless and are neither influenced by market sentiments in their trading nor by greed for profit or fear of loss.
Crypto trading bots tend to analyze voluminous market data and present a specific course of trading action for a particular asset. The refined results, based on the trader’s customized data, help to give pointers to potential risks in the market that could be crucial to an investment decision.
Trading bots can be backtested to evaluate their performance and fine-tuned to make better trading decisions before being deployed in real-time. Certain trading bots, such as the Margin bot, also allow users to create and run their own trading strategies.
Here are some of the downsides to using a trading bot in crypto:
Bots cannot think independently. They are programmed to follow a routine that could be disastrous if they are monitored poorly, in a period of unprecedented market volatility, or in other instances where humans would have to trust their instincts. This may not be a plus for beginners in crypto trading.
While the use of trading bots by many traders may facilitate the provision of liquidity in the overall market, some traders could quickly erode liquidity, particularly on platforms that lack enough of it when certain trading strategies are employed.
The benefits of using trading bots far outweigh the drawbacks. When engaged correctly, and with ample knowledge of the market, crypto traders stand a better chance to take their craft to another level in terms of gaining foresight, experience, and profit. Crypto trading bots might not be perfect, but they can help you trade better when you program them right. Whether you choose to use a bot like DeltaBadger to dollar-cost average your crypto purchases, or set up Margin for grid trading, your chances of beating the market increase tremendously with trading bots.
While it may be possible for traders to design and run their own trading bot, the technical expertise, and other resources required to create these scripts may be outside the abilities of many. Hence, it is usually more convenient to deploy third-party solutions such as those that ProBit Global offers, like Margin, DeltaBadger, and Hummingbot. With the right platform, crypto bot trading can be very profitable.
It’s worth trying a bot for a better trading experience.