Automated trading is a financial investment approach where algorithms are used by investors to fulfill trades and make gains from that. The concept has been used for decades in the financial space and the outcome has been great for many traders. Generally, autonomous trading helps individuals with less trading experience to earn profits in the market. So it is important for them to know the avenues that will help them to do so. In this article, we will have a look at some of the automated crypto trading tips and tricks that will help them to earn a good amount of profits.
What Is Automated Crypto Trading?
Automated crypto trading platforms are software that are automated and that trade digital currency for you. To avail an automated crypto trading channel, you are required to make an online account along with a trading bot and choose a trading strategy to use. Once you have chosen an automated trading bot, the software will purchase and sell your digital currency for you that will be based on the parameters of the software.
Most automated crypto trading schemes operate as APIs. API trading bots operate as a middleman that trades for you on another exchange you are connected with. 3Commas is an API that can be used for automated trading on crypto exchanges like Coinbase Pro, Binance, Bitmex and Kraken. These are the best automated crypto trading platform. Other than that, you will get various automated crypto trading app that will do your job.
Automated Crypto Trading Tips For Better Earnings
The latest and most safe form of automated cryptocurrency trading are the automated trading bots that function on the blockchain. Instead of availing a website or API, tokenized crypto trading avail smart contracts on the blockchain. Smart contracts are basically code that perform financial operations autonomously –– this code is typically uploaded to network of Ethereum, as it is the leading digital currency that supports smart contracts. With that, let us have a look at some of the automated crypto trading tips that will help you to earn a good profit.
It would be of help if you did Some Backtesting
Since you wish to associate the trading bots on a live account where your money is also associated, you are required to do some serious backtesting of the element before using it officially. The backtests focus to help investors evaluate the trading bot operations and ensure the safety of their investments. This is among the most crucial crypto bot trading strategies that should be kept in mind.
Monitoring of The Trades Regularly
Generally, the aim of trading bots and automated trading is to assure that your trades are done automatically without your physical presence. Some traders leave their digital currency bots unattended for hours, aiming to get great results. However, autonomous trading bots need timely monitoring for utter efficiency.
This is because bots are algorithms and systems that may encounter technological failures, crashing programs, low bandwidth issues, and mechanical failures. In some scenarios, these problems may cause failure in sending orders; hence, you may miss chances.
Begin With Small Manageable Trades
This is another automated crypto trading tip. Every investment and financial strategy has a learning curve before the trader learns the trading skills. There is no exception in automated trading. An investor gains trading experience on autonomous systems by continually using them over time.
Prevent Scamming Bots
Another strong automated crypto trading tips for a starter crypto user inclined in automated trading bots is to ignore scams. Like no other time, the amount of scams in the financial space is increasing, and one of the largest losers is crypto. Investors in crypto have lost billions since the inception of crypto. Therefore you need to be vigilant.
Take Into Account the Impact of News and Announcements
Several announcements occur daily, weekly, and monthly, which could have great fluctuating effects on the market. When trading manually, it is convenient to make decisions when such announcements are made.
However, the bots are supposed to be set to note the market alterations that may happen after some autonomous trading announcements. It is good to program your system to make sure it does not open trades on an immediate basis when the announcements are made, but instead, wait some time to note the market shifts.
The Bottom Line
Algorithmic or automated trading is among the best trading strategies that is available in the financial space, especially by novice traders. Even though the systems are formulated to maximize profits, various automated crypto trading tips can help you make even more from these tools.