What You Did Not Know About Cryptocurrency Bot Trading
Unlike the traditional markets like the stock market that has a closing time or period where stockbrokers can go home, get some sleep and get refreshed for another day, the cryptocurrency trading market never sleeps or slumbers; it is a 24/7/365 affair which sounds a little too stressful and surely crazy.
Traders familiar with the volatility of the cryptocurrency market know how it feels when you wake up in the morning, and you see your cryptocurrency assets had dwindled down in value or increased it all depends on how the market behaved when you were fast asleep.
That’s why traders have opted for the now very popular cryptocurrency trading bots to bring a little sanity to their lives already. These trading bots give traders total control of their assets and their trading activities even when they’re asleep; machines don’t sleep; this means the bots are always awake and doing the trade, you just have to program the bots to trade in a way that you’ll like.
What Is Algorithmic Trading?
Before you start using bots for your cryptocurrency trading, there is something you’ll really need to get familiar with, and that is what algorithmic trading is all about. Basically, algorithmic trading is the type where you execute your trading strategies using computer programs and algorithms.
Algorithmic trading has several benefits, and it includes saving time on trades and cutting cost by opting for the best possible trade at that period. Basically, codes are used to execute trades; this code also makes market condition checks across different cryptocurrency exchanges 24/7.
The Strategy For Cryptocurrency Bot Trading
A cryptocurrency trader applies several strategies while trading so that they can make a profit. When you trade with a bot, the strategies are more or less the same; you just need to get yourself a bot that’s robust enough to perform some of the bot trading strategies which includes
- Momentum Trading
This trading strategy is based on the assumption or says believe that price will always rise above average and fall at the end of the day. Using this strategy, the entry and exit point in your trade is highly important, and bots are programmed to trade using this strategy.
This trading strategy depends on how fast you are to identify the difference in the price of cryptocurrency on several cryptocurrency exchanges and cashing in on it. That’s why this strategy is perfect for bots than humans.
Let’s say you have Bitcoin trading at $1 in one exchange and trading at $1:80 on another trading platform die to time difference or other factors, the bot quickly cash in on the difference while you sleep.
- Mean Reversion
This bot trading strategy lies in the fact that when a coin price deviates from its average, it will surely revert to that average.
Basically, with this assumption, you buy low and sell high, the bot is algorithmically programmed to do this albeit faster and also wasting less time.
Wrapping It Up
Cryptocurrency bots have certainly made life easier for traders around the world; it makes trading faster and easier, traders and investors are more likely to cash out and take advantage of the volatile market. More importantly, traders can sleep with eyes closed knowing that they have a guardian angel watching over their investment, a guardian angel created with codes and numbers.