By Lucas Williams
Cryptocurrencies are known for their volatility and prices to tend to swing drastically, within a matter of minutes and seconds. People have the opportunity of participating in crypto trading throughout the world and at any given time. The problem is that with such easy access, the effectiveness of human crypto trading is drastically reduced. In many cases, people are unable to react quickly enough to any changes that may occur in prices for achieving the optimal trades. Likewise, they may not be able to dedicate as much time as required for making the best trades.
Round-the-clock monitoring is required and that’s also not humanly possible, at least not in the long term. In these situations, crypto trading bots can turn out to be immensely useful. These are automated tools designed for conducting trades and executing transactions on behalf of people. Let’s look at them in great detail:
What are Crypto Trading Bots?
A set of programs that are developed for automating crypto trading on your behalf are referred to as crypto trading bots. Typically, it is the trader who needs to track market statistics and then choose when and which cryptocurrency to buy. This analysis and interpretation of market trends and statistics can be automated with the use of crypto trading bots. They are designed to accumulate market data, interpret it, calculate potential market risk and then execute trades.
It is not very different from hiring an expert to trade cryptocurrencies on your behalf while you sit back and see the profits grow. For instance, you can program your crypto trading bot to buy bitcoin on your behalf when its price goes lower than a specific value. You can often save a lot of time with crypto trading bots and they are more cost-effective than using the services of human experts.
Types of Crypto Trading Bots
There are different types of crypto trading bots you will find in the market. The arbitrage bot is the most popular one you will come across. These are tools that examine the prices of a cryptocurrency across different exchanges and then make trades accordingly in order to take advantage of the price variations. The price of cryptocurrencies tends to vary from exchange to exchange, so the bots that are capable of moving quickly will be able to beat exchanges that don’t update their prices in a timely manner.
Some of the other crypto trading bots use historical price data for testing out trading strategies that can be quite helpful for traders. Likewise, there are also crypto trading bots in the market that are developed for executing trades at specific signals, such as trading price or volume.
Benefits of Crypto Trading Bots
There are some core advantages that crypto trading bots can offer to users and these have contributed to their popularity. What are they? Take a look:
More powerful
There is a limit to the quantity of data that a person will be able to process at any given time. Human beings have their limitations and even after all data is processed, it can still be quite difficult to come up with insights based on that data. In contrast, crypto trading bots are a lot more powerful and they are able to handle and process bulk amounts of data at any given time and then come to plausible conclusions.
Efficient
Using a crypto trading bot for trading cryptocurrencies can prove to be a lot more efficient. There is no need for you to be concerned about delays, or human errors. As long as the trading bot receives all accurate and timely data and is using suitable algorithms, it will be able to trade assets with a much better chance of making profits. An added benefit is that these bots can work round the clock.
Emotionless
One of the best things about a crypto trading bot is that it makes all of its decisions based on data. As opposed to people, a bot doesn’t feel any emotions, which means there is no risk of greed or fear getting in the way. While experienced traders do make rational decisions, sometimes they may also get carried away, but this is not a problem with crypto trading bots.