Should You Use Crypto Trading Bots: Explained
Crypto trading is a good investment, but it is difficult. Even traders who are seasoned in this industry sometimes have a hard time figuring out when to buy or sell. Crypto trading is known to be very volatile, so it is impossible for traders to always seize profitable opportunities. For you to be aware of and attentive to everything that is happening in the crypto market, you have to be available 24/7, which of course, is impossible for any human being.
Because of this, people have wanted to automate crypto trading for a long time. Crypto trading bots make this possible. In this article, we discuss why crypto trading bots were invented and why you should use them. Let’s dig right in.
Why Crypto trading bots were invented
You might have heard about software programs that trade cryptocurrencies on behalf of humans. These computer programs are what we refer to as “trading bots.” These programs are efficient and help eliminate human mistakes in cryptocurrency trading. They are designed to understand the crypto market and can buy, sell, and hold assets. They can be thought of as traders’ personal assistants because they do all the hard work in crypto trading so the trader doesn’t have to.
All the trader needs to do is set up instructions to guide the bot, and when the time comes to take action, the bot will act according to the instructions it was programmed to follow.
You might be wondering how this is possible.
The trading bots are linked to crypto exchanges and equipped with an efficient mathematical model that allows them to trade automatically at the exchange. If you are interested in automating your trading strategy, you can get 3Commas, a crypto trading bot on an open-source platform. So what makes crypto trading bots so valuable, and why do you need them as part of your investment strategy?
Security Considerations
They are computer programs which automatically trade crypto on exchanges to help users with profitable trades. As these bots can be expensive and require relinquishing some control over your account, it is important to understand the security considerations involved.
When choosing it, the first thing to consider is its security features. Does it have measures in place to protect against cyber attacks, such as two factor authentication? Are there restrictions in place regarding where and when it can access funds or make trades? It is also important to pay attention to privacy policies, and determine what information the bot will have access to.
You should also consider how reliable the providers are. Make sure they have a good track record of successful trades, and read reviews from other users before opting for their services. The providers should also provide adequate support for user queries via email or live chat.
Finally, understand who is liable for any losses incurred using a bot — be sure you are aware of all fees and legal liabilities associated with using one. As they may require more technical skill than manual does, investing in some education beforehand may prove beneficial to – make sure you are able to properly monitor your investment activity when using one of these programs!
Why you should integrate crypto trading bots
Below, we have highlighted three reasons why traders should use trading bots. The benefits listed below will help you decide if automating your trading strategy is a worthwhile investment for your business.
They are easy to use
Crypto trading bots don’t require the trader to know how to code. Instead, the trader should only know how to trade. All you need to do is give the bot instructions regarding the assets you want to trade, the entry and exit positions, and how often it should trade. Trading bots can support several exchanges at once, so they can place trades at different exchanges simultaneously.
This feature is great because it makes work easier for traders who like switching between different exchanges to trade. The crypto trading bots also help you have more free time on your hands to do other things because you won’t have to spend a lot of time keeping tabs on changes in prices on the platform. With the right trading strategies, the trading bot will do all this work for you.
Better risk management
Crypto trading bots are considered more efficient because they follow the rules provided to them. It is designed in a way that allows you to set up measures that govern the trades, and if one of these measures does not push through, the trading bot cancels all the other programs and stops trading to prevent financial loss. This is beneficial because it enables traders who do not follow the trading process 24/7 to trade the crypto market with minimum risk.
It keeps traders from losing all their capital to unprofitable trades. Trading bots are also advantageous to use because they enable traders to test strategies from the archives before investing real money. Back testing involves trading on simulated exchanges without risking your capital. Considering the results achieved, you can optimize these strategies until they are effective enough to gain you more profit.
They are transparent
Most crypto trading bots offer transparency, meaning anyone can access their code to view how they work. If you have dealt with other financial software, you know it is hard to see what is happening behind the scenes. However, with trading bots, it is easy to tell what is happening 24/7, as they do not hide anything from their users.
Moreover, these programs are not susceptible to human emotions. Humans are too emotional and tend to get affected by the pressure that comes with cryptocurrency trading. However, no matter how insane the markets get, trading bots remain unmoved and go through with the strategy no matter how the market looks.
Bottom line
Let’s face it, cryptocurrency trading is not an easy task. It is also not for the faint-hearted. Crypto trading bots are great accessories that, if used correctly, can help you make significant profits. However, note that not everything is always as good as it sounds. You also need to research and understand the drawbacks in order to avoid the scams that inexperienced traders sometimes succumb to.
