Cryptocurrencies have been around for over 14 years now and have been known for their volatility. The prices of crypto change drastically almost on a daily basis or even in minutes. So many investors are trading in the crypto at all times making the market more competitive. This is the reason why traders new to the market lose a lot before they start winning as they can not react as quickly as they would like to. They can give more than the time they have on their hands to trading making them lose to traders who have more time.
Crypto trading requires the full dedication of traders and someone lacking even a pinch would lose it to others. This makes the trading game unfair to others and to make the game fair, trading bots were introduced. Crypto trading software or trading bots are automated platforms or tools that take care of trade conduction and execution while human investors take care of their other tasks.
What are trading bots?
Automated trading software or bots are programmed to carry out trading instructions given to them by traders. The traders set some rules of trading after observing the market and making strategies. They use the statistics to buy a cryptocurrency and then start buying/selling accordingly. But the timing of the trade matters a lot. This is what human investors teach their trading bots. These trading bots analyze the market data according to instructions and then carry them out.
You are basically hiring someone with the same experience as you who’ll make the trades for you. Only this someone is faster, cheaper than an actual trader, and gives you a lot of time to relax. An example of trading platforms making a trade is, that you can teach the bot to buy a cryptocurrency when the price is low and when the price reaches a certain point, it is taught to sell that crypto and wait for the price to go lower again to buy more.
How Crypto Trading Software Work
The traders do their research and find out platforms and bots that will be more useful to them. They download the code and start using it. Some platforms like Bitcoin Code even give the freedom of trading online without any technical knowledge. These bots have user fees that are so much lower than hiring trading experts. The requirements of all these bots and trading software are different from each other. To get the maximum advantage from these trading bots and software, you need to have their complete know-how.
Here’s what traders need to fully know about an automated trading platform or trading bot before they start trading with them:
1- Is the process of registration easy on the platform?
2- Does the platform I’m buying support the currency I want to trade-in?
3- Is the price of the platform feasible for my pocket?
The investor’s account has to be stocked with the cryptocurrency they want to trade with before they begin their journey with a platform. The investment decisions have to be of the trader that is set up in the trading bot. If you are not willing to put any time or energy into trading with trading bots even, it’s hard for you to make profits.
Trading platform components
Most crypto trading platforms have similar components. They are in fact a must when trading with a bot:
Market Data Analysis
The trading bots do the market analysis by collecting data from multiple sources and then deciding whether they will buy or sell the crypto. The users can even customize which data to collect from the market and which one to ignore. This gives refined results and traders can generate signals using this data.
Market Risk Prediction
A crypto trading bot needs to not only predict opportunities but also any risks involved. Market data is collected and if there’s any risk waiting in the market, it is predicted beforehand using automated trading tools like trading bots. This risk will also b a factor that helps make trading decisions.
Buying/Selling the Assets
Every bot uses APIs that help sell and buy cryptocurrencies. The purchase and selling decisions are made strategically. A trader might not want to buy the coins in bulk, and sometimes, the trader might want to sell the coin ASAP. All of these decisions are then executed by the trading Platforms like Bitcoin Code that take care of all the executions smoothly.
Advantages of Crypto Trading Bots
Crypto Trading platforms have many advantages over manual trading. Let’s look into some of them.
Human traders have a limit to the data they can store and process at a time. The processing of data needs to lead towards a precise strategy using those insights which are almost impossible for human beings without spending days if not months on the data. But a trading bot can take up any amount of data and process it in seconds to make trading decisions.
Automation is always more efficient than manually done tasks. The same is the case in trading where assets are traded automatically. There are no delays and even human errors. If the bot has the correct market data and the algorithms are suitable, the assets can be traded more efficiently making more profits. With trading platforms like Bitcoin Code, you don’t have to worry about trades stopping. They work 24×7.
There are no emotions associated with a trading platform. All the decisions are based on market data and the correct strategy is based on that data. The decisions are even more rational than an experienced trader in the market.