Cryptocurrency trading is much like the stock market. Except that the volatility is out of the charts and it runs all day, there are no closing hours like in the stock market. However, there are no individuals with dubious morals shouting at each other. Why? Because those same individuals shout at a screen and also because the cryptocurrency markets are mostly populated by robots.
What are Trading Robots?
Training robots, or bots as they are usually known, are software programs that interact with financial markets and do the trading automatic for the user. They decide whether to buy or sell an asset based on an algorithm that analyzes and interprets market data. The data analyzed is usually trading volume, number of orders, price and time.
Trading software has been used for years in conventional financial markets. However, they are rather expensive and were mostly used by hedge funds in the equity, commodity and currency markets. Now trading bots are becoming mainstream, especially after the crypto boom last year. So, should you be using a trading bot? Are you missing out on that sweet crypto money? It depends. How skilled are you as a trader? Although bots can make money for you, you have to know how and when to set them up. It is a grind, very similar to playing online poker. If you are still interested let’s look at some ways that having a trading bot can facilitate your life.
Advantages of Crypto Trading Bots
The first advantage is that trading bots offer constant interaction with the market, meaning you can go to sleep or go about your day and have your little friend do the work for you. Not only that but you can adjust it to monitor, analyze and trade multiple different assets in different markets. Another advantage of using a trading software is that it is emotionless, meaning it won’t be affected by the emotional swings and tilt that affects every human trader. And finally, it can trade better than a human in terms of the speed, an order is executed faster than a human clicking, and in terms of gathering and analyzing data, the bot is able to juggle and analyze greater amounts of data than a human can.
In our next article, we will look into how to start trading on a cryptocurrency exchange using robots.