You can use Robots in your Cryptocurrency Trading

You want to trade cryptocurrency.

20:26 07 September 2018

Source: Pixabay

You have heard about the eye-popping 3000% returns on crypto compared with the measly 10-15% ROI offered by the stock markets and you want to climb aboard the crypto bandwagon. There are two ways in which you can benefit from participating in the cryptocurrency market. One way would simply be to “buy and hold”. This strategy would be comparable to staying invested long-term on the stock market. In the stock market, a long-term investment means that you invest in a stock and wait patiently for the stock to grow, led by fundamental factors. However, in the stock market, you will find a number of day traders who buy and sell stocks and futures based on technicals and on market movements. Now, to take advantage of the swift changes that happen in the market, the traders use complex algorithms that focus on changes in indices and market prices caused by the trading activity.

Cryptocurrency trading robots are just for traders like you

You do not want to be a simple long-term investor who wants to invest and sit on the sidelines and wait for the market to play out. Instead, you want to be in the thick of the action. You want to buy low and sell high. You want to track and trade the cryptocurrencies as they grow exponentially. In short, you want to be a crypto trader. However, you need to be prepared for the challenges of the cryptocurrency market, which, unlike the other financial markets, never closes and never sleeps. This can be a highly stressful scenario for traders. You surely do not want to be a part of that trading community that wakes up to pleasant and unpleasant surprises because of actions that happened in the market while you were in deep slumber. That's where crypto robots come in; crypto robots are meant for traders like you who want to be in control of their trading at all times. This is because the crypto robot will never sleep and will execute your trades while you may be sleeping or are busy with other mundane chores.

How do trading bots work?

 

A crypto trading robot or bot is a software that interacts directly with the financial exchanges and places buy or sell orders on your behalf depending on the interpretation of the market data. The bots monitor the price movement in the market and make decisions based on a set of pre-defined and pre-programmed rules. Typically, trading bots will analyze market actions, such as volume, orders, price, and time. However, trading bots can generally be programmed to suit your own tastes and preferences.

Why trading bots have become so popular

Trading bots have been popular in the conventional financial markets for some time. However, market data here was exclusively available to brokers, high-net-worth investors, and investment houses only. Nevertheless, due to the transparent nature of blockchain, cryptocurrency exchanges tend to grant their customers direct market access. Thus, crypto traders have the opportunity to analyze the exchange’s electronic order book. For crypto traders who trade passively and are unable to dedicate large amounts of time to analyze the market, trading bots will allow them to make more efficient trades without having to keep on top of the market at all times. This is the major reason for the popularity of trading bots. Further, although the cryptocurrency market is less mature compared with other financial markets, its digital nature and a strong technology base have allowed the market to integrate the latest practices and provide crypto investors access to a wide range of trading strategies such as arbitrage, market moving, and analysis of exponential moving average (EMA). EMAs track market prices over a set period and the bots can be programmed to react to thresholds in keeping with the trader’s risk appetite. Trading bots allow an investor to execute rapid trades and take advantage of different profit windows, which is impossible to achieve with manual trading.