Note: This is a guest post written by Jonathan C
Frequent shifts in global markets and asset prices drive the profit of millions of cryptocurrency traders. The traders are ever busy exploring methods for outperforming the market and earning more. However, navigating through the ins and outs of the market can sometimes be stressful. Especially given that one has to keep track of hundreds of unpredictable daily changes. Therefore resulting in 86 percent of these traders resorting to trading bots while traversing the crypto-verse.
Thanks to technological advancements in Artificial Intelligence (AI) and Machine Learning (ML), bots have become a hot topic to millions of traders.
With the increase in demand for these robots, the market has also faced an increased bots supply, which has made it even more difficult for traders to choose the right bitcoin trading bot. An effective trading bot will enable you to execute fast and accurate trades more efficiently than you would manually. Therefore, choosing the right bot is a critical step, and this guide is to help you make an informed choice. Visit the Bitcoin Code website for more information on crypto trading using bots.
Consider the following tips while choosing an automated crypto trading bot:
Trading depends on precision and accuracy. The more you gain experience in trading, the more you find the necessity to remain precise. Most new traders do not have a problem with shifting in and out of positions. You will understand the importance and effect of being careful while selecting trades with time. Usually, trading bots are not designed to be careful but to remain precise. For instance:
I will sell my Tron (TRX) when the price of Bitcoin (BTC) hits $100,000. To conduct this trade manually and end up successful requires a high amount of both patience and skill. There is a probability of accidentally missing the mark and selling TRX when BTC hits $100,010. This is a measly miss, but it means I didn’t achieve our strategy accurately. I should have used a bot to monitor market performance and execute the trade promptly. This is because bots are fast, reliable, and precise in analyzing market trends and initiating trades.
The best way to assess the credibility of a trading bot is to check online reviews. A transparent bot will hold accountability for your personal data, the trading process, and how profits are generated. Furthermore, the last thing you’d want to worry about with a bitcoin bot is security. Therefore, you are choosing to trust the reliability of the software and ensure there are no financial risks at hand.
A good bot company will guide you on the best trading strategies. They will also offer informative guides and tutorials on how to use their platform. Some will even go the extra mile and provide free trials. Be cautious of a bot whose information you cannot find online.
 Performance and Reliability
A trader should not lose any trading opportunities after a bitcoin trading bot has broken down. The time a bot stops to work could be the perfect opportunity to knock in some profits. Therefore, you need a trading bot you will rely on at all times. Remember, you are putting your funds at more significant financial risks, and a small connectivity error could lead to losses. The best crypto trading bot teams have undergone extensive performance testing to ensure they are reliable.
How a crypto trading bot works
Cryptocurrencies are known to be notoriously volatile, with crypto prices fluctuating significantly within a short time. Besides, the cryptocurrency market is open 24/7, and traders can decide to make their move at any given time of day. These two factors massively limit the effectiveness of trading manually in several ways.
Many traders cannot quickly react to price fluctuations to capitalize on the trades that are ideally available for them. The unique solution to all these is trading using trading bots. An automated crypto trading bot can conduct and execute trade transactions on behalf of human traders.
Many bots can include subscription fees, some of which can be very pricey. Usually, investors select the bots that can satisfactorily meet their trading needs by looking at the factors mentioned earlier and then download the program code from its developer. Every bot has specific requirements regarding the software and hardware.
Many automated crypto trading bots have the following aspects in common:
- Market data analysis: The trading bot will keep raw market data from varied sources and decipher it. The tool uses this raw data to decide whether to sell or buy a specified cryptocurrency. Most trading bots allow users to choose the type of information that should go through the signal generator section to produce polished trading signals.
- Market risk prediction: This component also utilizes the raw market information saved to calculate the potential risk factor in the crypto market. The automated crypto trader will decipher the data and decide the amount to trade based on the risk factor.
- Buying/selling crypto assets: Crypto trading robots utilize APIs to buy or sell cryptocurrency assets profitably. At times you may not want to buy crypto assets in large quantities, and other times you may want to purchase large quantities. The API module takes care of this part of trading assets.
Check online, seek advice, and most importantly, test what is at hand. Welcome as many recommendations as possible from experienced traders. With this information, you will be able to choose trading software easily.