Automated trading has become the need of time as it lets you trade cryptocurrencies without having to sit at your computer’s screen at all times. Automated trading uses algorithms that buy and sell cryptocurrencies at the most ideal times. Once you have set a strategy in these trading software, your trades will be executed depending on the factors you prioritize like asset price, technical indicators, or the proportion of value in your portfolio.
Automated trading software can be very handy if you’re not really a tradesperson but want to earn money in this easy way. We get it! You’re busy. You don’t have time to regulate each and every buy and sell of cryptocurrencies to earn some profit. The automated trading software will save you the pain of doing so. Many different options of trading software are available in the market but only some actually meet the most requirements.
What is Automated Crypto Trading?
Automated trading is done through trading platforms that make all the trades for you. With automated trading, all you need to do is fill in your platform with the strategy you think will make you money, and let the trading software do the rest. All you have to do is make an online account on one of the trading platforms and select a strategy that you want to use. The platform’s program will now buy and sell according to the parameters you have set.
Today, the most reliable trading software are automated trading bots that are based on blockchain. They use smart contracts on the blockchain rather than using a website or even an API. Smart contracts help perform financial trades with complete autonomy. This is basically a code that runs on the Ethereum network which is the most popular network supporting smart contracts.
Establishing Trading “Rules”
Some of the automated trading software have this “magic” that helps the traders build strategy. It allows the users to select the trading indicators from an already built indicator list and make a set of rules that can help them in trading. For example, the user might want to sell a small percentage of his assets if the price of that asset reaches a certain point, the automated trading software will do it automatically at any time.
There are still many traders who create their own strategies depending on their own indicators. They work with the programmer and build these rules for themselves. This might take a lot of time but the trader has more flexibility and more options to set the indicators. This can also mean, the trader can achieve better rewards. Yet there is no perfect strategy that can always help gain more rewards.
Bitcoin Up is an example of one such automated trading software that helps monitor the market to make the trades on behalf of you. Once the strategies are in place, the computer will follow it just as you like. However, in big markets, these set trades can prove to be lethal in the long run for investors.
Advantages of Automated Systems
Trading software like Bitcoin Up have a lot of advantages that let the trader have a bit of rest while the computer monitors the trading progress. Some of them are:
There are no emotions involved when it comes to automated trading systems. Traders mostly stick to the plan and create strategies more intelligently. As the order execution is automatic as soon as the rules are met, traders will not have to question their instincts. Automated trading helps not only those who are afraid to take a bold step but also those who are bound to make risky decisions and have no way to stop the losses.
Backtesting helps determine if your trading applies trading rules to historical market data and also determines the viability of the idea. When the system for automated trading is designed, there’s no room for interpretation and all the rules have to be absolute. The computer does exactly what it is programmed to do, nothing less nothing more sp the traders have to make a precise set of rules. These rules are then tested before any money is risked in trading. Backtesting allows traders to evaluate a trading idea, tune it a bit, and determine the average amount a trader can expect to win (or lose) per unit of risk.
Since everything is automatic with Automated Trading Systems, there’s a certain discipline observed with it. Established rules and automatic trade execution preserves the discipline no matter how volatile the market is. The most important factor that hurts the discipline is the presence of emotions which is not the case with the ATS. The trading plan is followed exactly how it should be and no ‘pilot error’ is observed.
Planning a trade is a big challenge in trading and trading the plan is even bigger. The trading plan might be profitable, but traders can still impact the expectancy of the system. There’s no guarantee that the trader will make a profit 100% of the time. Most traders leave the trades after losing their investment two or three times. The next trade might have been a winner but the trader leaving trading messed up the expectancy of winning.
Automated Trading System- Diversifying Trading
Traders can easily trade different strategies with multiple accounts at one time using automated trading systems. This way, the risk is spread across different parts and creates a wall against most losses. Automated trading systems achieve all that a human couldn’t and that too in miliseconds.