Are you looking for a way to automate your cryptocurrency trading? Are you concerned about the unpredictability of trading cryptocurrency? Well, you should consider using a cryptocurrency Autobot trader.
Indeed, cryptocurrency trading is unpredictable, and this can be traced to the volatile nature of these digital currencies. However, suppose you want to be successful as a crypto investor. In that case, you must get a good cryptocurrency Autobot trader, which will relieve you of the stress of constantly trading, trade better based on analysed data and enable you to focus more on your job.
In this article, you will learn the meaning of cryptocurrency trading bots, the best trading bots for cryptocurrency and how to use crypto trading bots.
What are Cryptocurrency Trading Bots?
Cryptocurrency trading bots, also known as cryptocurrency Autobot traders, is defined by Janny Kul as "computer programs that automatically buy and sell various cryptocurrencies at the right time with the goal of generating a profit." CNBC reported in 2021 that cryptocurrency trading bots are responsible for 70-80% of the total volume of cryptocurrency trading.
These trading bots operate longer than humans during the day and can take advantage of as many trading opportunities in the market as possible. Crypto trading bots can also multitask. As a human trader, you are only limited to analysing one or a few crypto coins per time. The crypto trading bots can work on several assets simultaneously, which indicates that you can have several potentially profitable trades.
Further, they tend to think faster than humans and make trading decisions quicker. In addition, they eliminate all forms of human error that occur during trading as they neither have emotions nor can they be distracted.
How to Use a Cryptocurrency Trading Bot?
Effective use of cryptocurrency trading bots will help you fully maximise the benefits of using crypto trading bots as an investor. Here are the basic things you need to know about using crypto trading bots:
- Sign up with a Crypto Trading Bot Service
The first step to utilising cryptocurrency Autobot traders is to create an account with a cryptocurrency Auto bot trading platform. Then, connect the crypto auto trading software to your crypto trading platform, that is, your exchange or wallet.
You should know that crypto trading bots work via Application Programming Interfaces (APIs) and do not work alone. You need to connect them to your crypto wallet or exchange from where the Autotrader will make trades. Finally, ensure you fund your trading platform with crypto assets.
- Select a Strategy
After opening an account with a cryptocurrency trading bot program, the next thing you need to do is select the strategy the crypto trading bots will use in trading on your behalf. At this stage, you must indicate the calculations that will aid your bots in knowing the time and the particular form of asset to trade. Once you create this strategy, it is critical to backtest it to know its performance. Some of the strategies you may adopt to fully utilise trading bots for your benefit are Mean Reversion, Arbitrage, Natural Language Processing (NLP), and Momentum Trading.
Let's take a brief look at each of these so that you can know which you wish to opt for:
● Mean Reversion: This strategy assumes that the prices of crypto assets revert to their average price after a large move. In essence, if the price of a crypto coin or token makes a significant movement towards the upside or downside, the strategy presumes that a reversion will most likely happen. So, in case of heavy price increases, the strategy shorts the asset, while during a huge price fall, the strategy goes long on the crypto instrument.
● Crypto Arbitrage: Crypto Arbitrage bots focus on purchasing assets from one exchange and quickly selling it on another platform for a higher price.
● Natural Language Processing (NLP): NLP is a subdivision in artificial intelligence that uses news and information to make crypto trades. The program scans the news for potential market-moving news and executes trades in line with the clues it derives. For instance, an Autotrader working with NLP picks up a news item in which the Securities and Exchange Commission (SEC) says it will regulate crypto trading. In this case, such an Autotrader will most likely enter a short trade.
● Momentum Trading: Crypto prices often move in the direction of trade momentum. For instance, if there is a lot of selling going on in the market, prices will likely fall. However, if many traders are buying, prices will increase. Momentum trading crypto bots study the market in search of these heavy moves in either the buy or sell direction to make trades.
- Analysis of Market Data
Crypto bots can be utilised to get predictions and potential trades the trader can make based on available data and technical analysis. In addition, you can use these automated crypto trading bots to assess the market to get raw data from numerous sources in the market.
The bots then analyse the data retrieved to conclude whether or not to buy or sell a cryptocurrency. These analyses guide traders in determining how to go about their trading.
- Customisation of Data
Many crypto trading bots allow traders to select the kind of data they want, which will bring about refined outcomes. The predetermined data is always inserted in line with the trading strategy picked by the trader.
Cryptocurrency trading bots can be used to automatically implement trades in your absence in situations when some requirements or predetermined data set for a particular trade are met. By doing this, a trader will effectively use the crypto bot trading strategies to gain an advantage of the cryptocurrency market that operates non-stop day and night.
- Calculation of Risks
Traders can use crypto trading bots to allocate risks involved in a transaction based on the trade signal received. Hence, the trader can use automated crypto trading botsto know whether or not to acquire or sell a particular crypto asset. Also, you can use crypto trading bot programs to know the amount of capital that should be invested in a particular crypto asset.
- Trading of Cryptocurrencies
Online crypto trading bots can also be utilised to process the trading of crypto assets. In helping you make trades, the crypto Autobot Trader goes through a set of tasks. These are:
● Identifying Market Signals
The Crypto Autobot trading software scans the crypto markets round the clock in search of trading opportunities. This software does this by prospecting for high-probability market patterns, either by relying on price action and chart analysis or market indicators.
The work of some Autobot traders ends here. This category of Autobot traders only provides signals and leaves the execution of the trade to the trader. The human trader sets the trade parameters, risk and other details.
● Trade Execution
Another category of crypto Autobot traders goes beyond seeking trades and helps enter the trades. They set all the trading conditions, the entry, exit and stop-loss prices. In essence, these Autobottrader types are completely hands-off.
What to Look Out for When Selecting a Crypto Autobot Trader
- Customisation
Developers of trading bots equip them with the right strategies and software to enable them to identify possibly profitable trades. However, you should know that they are not entirely certain. As such, the AutoTrader you choose should enable you to make your settings and customise options and features as you desire them. - Multiple Trading Platforms
Still on customisation, your Crypto Autobot trader must beable to work with most top exchanges and trading platforms. This factor is important because some Autobot traders are optimised to work with only a few exchanges. - Reputation and Reliability
Your Autotrader of choice must have received trusted positive reviews before you subscribe. Furthermore, research about the developers of the trading bot. Specifically, look for information about their experience in the crypto markets and their credibility in the industry.
Conclusion
Cryptocurrency trading bot programs are embedded with features that allow for easy automation of all processes involved in trading the cryptocurrency markets. Moreover, they can do this 24/7, an attribute most crypto traders do not possess. With cryptocurrency trading bots, human beings can leveragethe power of technology to help make returns from their short or long-term crypto investment.
This is what makes these cryptocurrency Autobots traders unique, and this is why you should consider making use of them to buy or sell crypto assets to boost your investment portfolio.
Do you need help making the most informed choice on how to utilise a cryptocurrency Autobot trader? Kindly drop a message for us in the comment box. We will gladly respond within 24 hours.
