The cryptocurrency market has been volatile as ever over the past two years. However, things are looking better. In fact, some people are projecting that BitCoin could potentially hit six digits in value before the year is over.
Photo by Nick Chong on Unsplash
Traders have been working harder than ever. Now, crypto markets are open 24/7 so you can trade them anytime you want, there is only one little problem, we humans need to sleep.
Naturally, we can’t keep an eye on the markets all the time, but like always, we make something to help with that. That is crypto trading bots, they don’t need sleep, so it makes them perfect for the job.
These crypto bots do trades on your behalf automatically, so you can make money sleeping.
What are Automated Crypto Trading Platforms?
Crypto trading bots use software to make trades on your behalf. They can use your predetermined set of rules (which is common with exchange bots) or do their statistical analysis and try to try and predict the market.
There are advantages to this type of trading, you are free, and you can do other things while supervising the bot. There is less emotion-driven trading, and there is now the ability to cash in smaller profits because of the speed of the bot and software compared to humans.
Remember that this is not some cheat code. You are unlikely to become a millionaire overnight. Nobody will guarantee that you will make money using this bot.
But using it correctly will make it a very valuable tool to use.
How Crypto Bots Work
These bots just follow the instructions that you give them. There are many automated platforms that come with bots of their own. Trading bots almost always execute those instructions and trades by connecting on exchange sites.
Trading bots are common with exchanges such as KuCoin, where you define the assets you want it to trade based on a set of parameters, but also you can self host bots, sign up to fully automated platforms that use API to make trades, or even join other bots created by others.
But all have one great thing, and that is they are machines. The bots execute commands in milliseconds. That lowers the risk of sudden price changes, takes the emotions out of decision-making, and allows you to work basically 24/7.
These all seem so easy and perfect to use.. You put money in, give it some instructions, and that is it. Just be cautious and choose your trading bot carefully because scammers are out there. One reputable platform we found is Immedia Edge, but remember to do your own research and educate yourself.
Are Crypto Trading Bots Safe?
Are trading bots 100% safe? No one can guarantee complete safety. There is always a risk in using robots when trading. First of all, somebody needed to program that bot to do what it does, so you need to believe in the person who made the bot, not in the bot itself.
There is always the fact that the cryptocurrency market is very volatile, which is not something to take lightly. Trading bots take a percentage of your trading profit – don’t worry, it’s only around 0.5% – so they are programmed to help you win.
However, everyone and everything can and will make mistakes, even bots. You should find a bot that is updated constantly depending on the market and dynamics. That way, you can get an instant advantage.
Is Crypto Bot Trading Profitable
Although people think manual trading is still the most used method of trading, they are surprised that this is not the case. Trading bots that use algorithms to do the trading are now used everywhere, even on Wall Street. Everything is traded through them. Even bonds, equities, and foreign exchange are now being traded by bots using algorithms.
The reason for a shift is relatively simple. Bots can make faster and more accurate decisions without emotions getting involved. They can also stick to trading strategy far better than humans, who tend to get carried away in a moment and shift from strategy.
Just remember that these trading bots are not perfect; they also have mistakes and can’t exclude all risks.
But, this automation of a trading process helps both experienced and new players. All you have to do is put in instructions. You need to have at least a basic level of knowledge of the market and an understanding of regulations and additional tools related to trading.
Is Crypto Automation Legal
There is nothing against the law about using trading bots. In the financial markets, bots are used and are a common occurrence while being well-regulated. Machines are now making more trades than humans manually. That goes for both cryptocurrencies and other markets.
Those trading bots are just a tool to replace human presence, all while controlled by humans, and there is nothing illegal about that.
However, there are some instances where trading bots are committing fraud, for example, pump and dumps, directing customers to be shady and not regulated brokers. These bots are few and far between, so it should be easy to spot them.
Disadvantages of Crypto Bots
We already spoke about all the advantages, but every coin and story has two sides. Now, these don’t mean you shouldn’t use trading bots it only means that you need to pay close attention to these things:
- Prior knowledge: Many experienced traders already have their predefined templates and setting, but it may pose a challenge for a new player when u first start.
- No promise of profit: Trading bots usually cost money, but they are not guaranteeing you anything in return. You need to believe in their judgment on making moves on the market.
- Lack of human judgment: All these bots operate the same, based on instructions you give them, which means that they don’t have the ability to think critically, and why is the market why is. This can, in some instances, lead to poor decision-making.
- Complexity: They are hard to set up for the first time, and that may push away some new traders who want to try it.
Closing Thoughts
Maybe before reading this post, you didn’t know trading bots even existed. Well, now you know they exist and can be used to make money and save time. If you want to try it, please be careful. No one can guarantee your returns, and those who do are scammers most of the time.
Besides that, you can start with little knowledge and money and learn along the way. Remember to be smart with your strategy and don’t be greedy; you will have very valuable tools at your disposal at all times.
Any financial information or opinions contained in this article are the author’s own and do not represent endorsement or support of any products or services by SmallBizClub.com.
7773 Views
Trending Articles
