As cryptocurrencies continue to garner popular interest crypto trading bots are making their presence felt too. These crypto trading bots make trading easier and hassle-free for individual traders and they can be obtained from open source platforms for free, or you may get licenses for use in exchange for a fee. But, knowing which ones are efficient and which ones are best avoided is important.
How can trading bots help?
Trading bots are essentially software programs that can interact with financial exchanges directly. They can, therefore, buy or sell on your behalf, after analyzing relevant market data. They are programmed such that they will track price movements and depending on this assessment, they will respond to the market according to preset rules.
- A trading bot will automate the trading process for, and any automation implies faster processing. What humans had to do manually earlier will now be done by devices free from emotions; this is the biggest reason why the speed of trading can be accelerated. Bots are not moved by emotions or biases; they can take decisions faster in the basis of data. The recently launched trading bots like immediate edge seem to be performing to the satisfaction of bitcoin investors and traders.
- Trading bots are driven by artificial intelligence and just like in self-driven cars or healthcare diagnosis; these AI-enabled bots will leave no room for errors.
- Crypto bots are highly scalable; they can process huge chunks of data in real-time. So, these devices will be updated with the latest news and announcements in real-time, and this is why they can make the best decisions in the shortest possible time.
- The crypto market is very volatile, and in seconds, things can change. Crypto bots work round-the-clock and they can respond to market changes while you rest.
- Bots are also capable of working in different time frames, employing different strategies simultaneously, and since these are not correlated, the risks are lesser.
- Tim Enneking, Chairman of EAM, pointed out differences between trading in conventional markets and crypto markets. For stocks, micro-seconds will matter but for cryptocurrencies, such tiny increments of time will not make too much of a difference. Using algo trading the Bitcoin investors can get access to multiple trading strategies; high-frequency trading, for instance, will need the use of software as there are many quick trades involved.
- Arbitrage trading is another advantage that crypto trading bots can offer. This allows you to buy assets in a market and sell these in another for higher prices.
- Investors get to access another useful strategy called market making through trading bots. This entails placing limited orders usually close to market prices, on both buy-and-sell orders. As prices go up and down over time, the trader’s also will place orders automatically and the trader can profit from the spread.
Almost anyone can start trading with crypto bots; traders may even choose off-the-shelf solutions. The latter are not desirable because most will opt for buying such easy-to-use money-making machines. So, when you start off, it is best to learn programming or get hold of an open-source trading bot that you can configure yourself.