Automated crypto trading enables you to actively trade digital currencies without continuously monitoring your computers. They use algorithms to purchase and sell your digital currencies at specific times. Depending on the automated cryptocurrency trading strategies that are being used by you, trades may take place based on technical indicators, asset prices, or the proportion of value present in your portfolio. In this article, we will have a look at this topic in detail.
What Is Automated Crypto Trading?
Automated crypto trading channels are automated software that allows you to trade digital currencies. To avail of an automated crypto trading channel, you are required to make an online account with a trading bot and choose a trading strategy to use. Once you have chosen an automated trading bot, the program will purchase and sell your cryptos for you based on the dimension of the software. The best automated crypto trading platform is Trality.
Most of the automated crypto trading apps operate as APIs. API trading bots function as a middle platform that trades for you on another crypto exchange that you connect to. 3Commas is an API that can be used for automated trading on exchanges like Coinbase Pro, Binance, Bitmex, and Kraken.
The latest and most secure type of automated crypto trading is the automated trading bots that function on the blockchain. Instead of utilizing an API or website, tokenized digital currency trading uses smart contracts on the blockchain. Smart contracts are codes that work financial operations autonomously and this code is typically uploaded to the network of Ethereum, as it is the leading digital currency that supports smart contracts.
When Should One Use A Crypto Trading Bot?
You should avail a crypto trading bot if you believe a certain crypto bot trading strategies can strike the market. Using a crypto trading bot does not assure you will be at the market, an automated crypto trading bot simply implements trades for you that are based on an algorithm.
Another purpose to use the best crypto trading bot is to widen your crypto holdings in a strategic way. With Tokensets, for instance, you can hold a singular token that portrays a trading strategy that trades both BTC and ETH based on trading indicators.
Types Of Cryptocurrency Trading Bots
There are 2 important types of crypto trading bots on the market presently: decentralized crypto trading platforms and crypto trading bot APIs.
Decentralized crypto trading platforms
Decentralized crypto trading channels are the most safest way to use automated crypto trading. This type of automated trading utilizes blockchain technology to trade digital currency autonomously. Your funds are kept in a smart contract on the blockchain, and you own a part of the funds in the smart contract that can be redeemed via digital currency tokens issued by the trading platform.
Crypto trading bot APIs
These are the most ordinary forms of cryptocurrency trading bots on the market presently. Crypto trading APIs connect to other digital currency exchanges to handle your investments. This is a good choice if you already have a crypto brokerage account on a renowned exchange like Kraken, Coinbase Pro, or Binance. Among them, automated crypto trading Binance is the most popular.
Advantages Of Automated Crypto Trading
Taking benefits of automated crypto trades can provide your some great advantages like:
- Timing: Since digital currency bots trade based on software, they can purchase and sell your digital currency much quicker than you could do manually. If you are trading based on a trading indicator, you can use a bot to place more precise market orders.
- Repetitive tasks: Most crypto bots in the industry trade 24 hours a day, 7 days a week. If you trade crypto based on the indicators of the market, you can use a crypto trading bot to do the operations for you.
- Consistency: Bots are much more persistent than humans, as bots are able to function nonstop and always implement orders dependent on specific indicators. Frequently it is hard to stay disciplined while trading cryptos, so using a trading bot discards the risk of “emotional trading”.
- Save time: If you use a crypto trading bot it will save your time as the program keeps an eye on the market and implements trades for you. If you do not want to always monitor the crypto markets, then this is just ideal for you.
Disadvantages Of Automated Crypto Trading
On the flip side, choosing automation can present disadvantages like the following:
- Security: Even though crypto bots are generally safe, you are required to hold your crypto funds on a crypto exchange to avail a trading bot. Storing your crypto in an exchange raises your risk of getting hacked, but most big exchanges are usually safe. If you wish to hold your crypto in a more secure way, you will require a hardware crypto wallet.
- Monitoring: Even though the bot watches the industry for you, you are still required to watch the prices of cryptocurrency. This is because digital currencies are very fluctuating, and your trading strategy may not be at par with the market scenarios.
- Experience needed: Automated trading bots are ideally used by advanced traders. If you are not familiar with the trading indicators that are used by the trading bots, you possibly should not use the bot.
Again, an automated crypto trading strategy does not assure that you will beat the market. Digital currency can be unpredictable and very fluctuating, so trading that is based on technical indicators does not always work. But there are some crypto trading bots that have had a history of dealing with the market by a substantial portion. If you do your trading based on technical indicators anyway, use a bot to save your time and to place more precise purchase and sell orders.
Frequently Asked Questions On Automated Crypto Trading
1. Can you automate crypto trading?
Automated crypto trading enables you to actively trade digital currencies without continuously monitoring your computers. They use algorithms to purchase and sell your digital currencies at specific times.
2. Is Automated crypto trading profitable?
Algorithmic trading can be highly profitable. However, The issue really is that there is just a big level of disconnect among the knowledge of professional investors and the hackers that create these types of algorithms and then make them accessible to the public.
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