In the cryptocurrency market, just like in traditional financial markets, bots – automated trading systems – are actively used. How they work, what are their pros and cons, and why you shouldn’t leave a bot unattended – this is what representatives of 3Commas automated crypto trading platform told us specifically.
People vs bots
According to Bloomberg, more than 80% of trades in traditional financial markets are made with the help of automated trading systems – trading robots or, simply put, bots. Traders set up bots, and they execute trades in accordance with the specified conditions.
Similar data is emerging in the cryptocurrency market. Automated trading eliminates the need to track the right moment for a deal, but also requires human attention.
Pros of trading bots:
Traders, like all humans, may find it difficult to control their emotions. The bot follows a given strategy without panic or hesitation.
With bots there is no need to constantly check the situation on the market – automatic programs do it on their own.
Bots can instantly react to market fluctuations and execute trades according to their settings. It is practically impossible for a human to place hundreds or thousands of orders in a second.
Bots do not sleep
Unlike the traditional stock market, the crypto market operates 24/7. This requires traders to be in front of the trading screen at all times. Using a bot doesn’t sacrifice sleep.
However, there is a significant “but”. Bots are able to relieve traders of many routine actions. However, you should not take them as an independent, passive source of income. Trading bots work solely on settings set by a trader. These settings require constant checking and, if necessary, adjustment.
Basic rules when trading with bots
Watch your bot.
To trade successfully using a bot, you need to control it. You should regularly check its activity: how well it operates in a particular market situation. Watch your trading pairs, analyze charts and check the news from the cryptocurrency world in order not to lose your investment.
Beware of fraudsters.
Never trust bots that promise you income after depositing cryptocurrency into their “smart contract. Real bots should only work through your account at a well-known cryptocurrency exchange. You must see all of your bot’s trades and bids. The bot cannot withdraw money from your account on its own. Permission to make transactions must always come from you – through your chosen trading strategy.
Best Bot for cryptocurrency trading
As the cryptocurrency market develops, there are more and more platforms that give you the opportunity to use trading bots. We have divided them into several types based on their key functions.
This bot track trends in the cryptocurrency market and make trades based on this information. Bots react to events and predict the movement of the asset’s value. Often, such bots provide an opportunity to set limits, upon reaching which the trade will be closed. It allows to fix profits and avoid large losses when the trend reverses. Access to the platform features depends on the plan.
- Manual trading
- Take Profit and Stop Loss
- Smart Cover
- Automated trading
- Long&Short algorithms
- Price Charts
- dogecoin calculator
- API Access
Alternative: Cryptohopper, TradeSanta.
Trading bots can save time, speed up trading activity, and help make profits. However, a bot should not be left unattended – it should be used consciously. Remember that the bot is not a trader. Only a person decides which strategy to use, as well as what and how to trade.