Unlike stock markets, the cryptocurrency world is open 24/7 and never sleeps, which can be a daunting scenario for casual investors and traders alike in the industry. Users that are familiar with crypto investment will also know the familiar feeling of getting up in the morning to be welcomed with either an unpleasant or a joyful surprise when they check their portfolio to notice substantial gains or losses.
Due to the volatility of the market, more and more people have started using trading bots that allow them to stay in control of their trading all the time. Also, a correctly quantified bot permits trades to be performed faster and more effectively that the trader would be capable of doing manually.
With the growing popularity of cryptocurrency, so have the availability of crypto trading bots, either licensed to users in exchange for flat fees or for free on open-source platforms. It is problematic, however, to ascertain which of them work effectively and which ones are a waste of time.
What Exactly Are Trading Bots?
Quintessentially, a trading bot is a software program that communicates directly with financial exchanges and sells or places orders on the investor’s behalf, contingent on the interpretation of the market data. These bots make the decisions by monitoring the price movement of the market and react according to a set of pre-established and pre-programmed rules.
Generally, a bitcoin exchange bot analyses market actions, like orders, volume, price, and time, even though they can be programmed to suit the investor’s tastes and preferences. Trading bots have been well-liked for numerous years in different standard financial markets. But, trading bots have not been conventionally available to the average investor since they cost a substantial amount of money.
For instance, a Bloomberg terminal can cost anything above ten thousand dollars. However, as a result of the transparent nature of blockchain, the cryptocurrency exchanges tend to grant their investors direct market access that offers users with the chance of analyzing the exchange’s digital order book, that was a type of access that was conventionally exclusively accessible to investment houses and brokers in traditional financial markets.
With numerous people trading Bitcoin unresponsively and therefore unable to bestow significant amounts of time in analyzing the market, Bitcoin bots aim to permit users to establish more effective trading without the necessity of staying on top of the market all the time.
Trading bots can help traders in making sure they always interact on the market, even without being physically able to do so. They can help in taking off some of the stress that goes along with financial trading markets, including the cryptocurrency market. Trading bots, however, are not an ideal choice for everyone, nor does everybody need one.
Casual investors are not the perfect customer for trading bots, and if your intent is to buy Bitcoin and hold onto it, then this would probably be not a suitable investment for you. Besides, if you are not familiar with creating financial strategies, trading bots are not a good fit for you.
If you have, however, the requisite knowledge and capability of overcoming trading obstacles, then a trading bot can be a valuable tool for you to monitor and make valuable gains from the Bitcoin market.