With the facility to participate in crypto trading from anywhere in the world while being among the most dynamic industries in the 21st century, cryptocurrency trading has gained popularity among investors for all the right reasons. As the crypto trading market is active 24-hours a day, a trader cannot constantly monitor the trends closely to get the best trades. For being convenient in their own way, many traders have thus started relying on some of the best crypto bots to initiate and conduct successful trade with minimum human intervention.
Explaining crypto trading bots
As an investor or trading in this industry, one needs to keep track of every trend and stats constantly to execute a profitable trade. This monitoring process plays a vital role in the outcome of the trade and choosing the right crypto to purchase or sell at a specific time can change the whole game. By being completely automated crypto bots are able to analyse the market by collecting various data, execute trades while measuring possible market risk. Crypto bots ensure you save a significant amount of effort and time and at times provide more effectiveness than hiring a human expert.
Different kinds of crypto bots
While there are many types of bots available in the market, the most common and preferred one is the arbitrage bot. Arbitrage bots are responsible for scanning prices across different trading exchanges and initiate a trade by taking benefit of the variations. As bots are completely automated, they can easily go through several different exchanges and pick the ideal price to open a trade and surpass exchanges that are delayed in updating the prices. Not only this, but some crypto bots also examine historical data to determine the trading strategies that can be quite convenient for the traders along with executing trades on crucial trading signals.
Top 3 benefits of using crypto trading bots
Due to their advanced programming and ability to execute trades without almost any human intervention, there are many ways traders can be benefitted.
Ability to decisions without any emotional factor
The major difference between a human trader and an automated bot is that crypto bots are immune to any greed or fear which means emotions have zero impact on the decisions here. While veteran traders are capable of executing a trade overcoming this emotional factor as well, many investors, especially beginners, tend to struggle with this aspect. For taking a decision based solely on mathematical calculations, there is no comparison to crypto bots.
Provides more efficiency
Using a crypto bot ensures a trader can get rid of any human errors as well as increasing the overall efficiency by removing any delay in the trade execution. Not only can a crypto bot stay active 24/7 without a break, but they are also capable of delivering profitable results as long as they are following the proper algorithm and collecting the right data.
Can handle a large amount of data
One of the major drawbacks to relying on a human trader is that the manual process can only handle a limited amount of data at a time. Moreover, it is also difficult to gain insight from a large amount of data as well. Bots on the other hand are capable of handling bulks of data at a time, analyse them and come to plausible outcomes easily.
Different types of trading algorithms used by crypto bots
Mean-reversion
In this type of algorithm, traders tend to relate the uprising of the prices due to a pull-back which means they are more inclined towards selling the cryptocurrencies. While the gain to loss ratio is quite less here, in most mean-reversion strategies traders have faced more wins than losses.
Momentum
In this strategy, the winning streak is pretty low but the gains are large when it happens. Unlike the mean-reversion algorithm, traders tend to buy cryptos when the prices go up.
With the increasing popularity of cryptocurrency trading worldwide there are so many misconceptions and rumours around crypto bots that often creates a dilemma among the traders to invest in them. Although there are many perks regarding a crypto bot, one must do thorough research before investing in one.
