How Automation Can Help Crypto Investors Trade Smarter
Everyone is looking for a way to make extra money these days, and in countries where unemployment is on the high rise, many people are looking into other legit sources of income. With the world becoming very financial literate, everyone is now aware that you should make your existing cash to make more money for yourself. Investment has become popular in these times; everyone is looking for something to invest in to bring value. People invest in real estate, small and medium-sized enterprises (SME's), Cryptocurrencies, and so on. Investing in cryptocurrencies or cryptos is the trending thing now; technology has crept into every aspect of life. In this article, you'll get to know more about crypto trading and how automation helps traders of crypto trade smarter, the significant types of crypto bots, and the disadvantages of using it.
What is Crypto Trading?
Cryptocurrencies are digitized currencies that can be built and developed so that the owner of such crypto can trade and make transactions. They are operated on blockchains, decentralized ledgers showing different crypto transactions carried out by different crypto investors. Other cryptocurrencies are being sold in this present day; as the years go by, a lot of cryptocurrencies are being developed for people to use to transact. Examples of these cryptocurrencies are; Bitcoins, Ethereum, BHC, Litecoins, and Altcoins. Crypto trading is all about making financial exchanges on crypto assets and predicting the market.
Although not compulsory, it is always advisable to get a broker when transactions or trades occur. Most of the time, what happens in a crypto exchange is that the investor receives a broker who would help him with the buying or selling of the cryptocurrencies by connecting him with other traders who also trade cryptos. Buying and investing in cryptos is not a difficult task; all you have to do is get a wallet, usually in the form of applications that can be downloaded, and create an account on the crypto wallet. Investors mostly make use of brokers to get their trades done to reduce risks. A lot of individuals prefer to invest in and trade cryptos for different reasons. Cryptos are very volatile; that is, they are not stable. One can get a high return on a transaction, but it's also important to know that one can also suffer a considerable loss because of its volatility.
What is Automation?
Like the name suggests, using a computerized system or software to carry out activities that a human normally would. In the world of trading and cryptocurrencies, automation refers to making use of a bot to trade. The automated crypto platforms or software trade the crypto market on your behalf. To make use of this automated platform, you need to create an online account and choose a trading strategy that the BOT would keep having to use. There are different automated crypto trading platforms, and most of them operate as Application Programming Interface (APIs). The automated crypto platform works so that it only carries out trades that have been pre-programmed into it. It is essential to know that computerized systems use software to link up directly with an access broker. Also, before the automated system is launched, specific rules regarding trading would have been programmed into it.
What Are the Two Major Types of Crypto Automation Softwares?
The two major types of the crypto bot are; the crypto trading APIs and the decentralized crypto trading platforms. The crypto trading APIs link up with other crypto exchanges to enable them to manage crypto investments. It is known to be the most popular and common crypto automation software or bot. To enjoy all the benefits of the crypto trading API, it is best to have a crypto brokerage account.
Decentralized crypto trading platforms are a secure way of trading. They make use of blockchain technology to go about carrying out transactions. These transactions undertaken are anonymous and not readily available to a third party.
Types of Automated Crypto Trading Platforms
There are different types of bots or automated trading platforms that traders use to help their trading. It is essential to know that each platform is different and unique in its way. You should have a good knowledge of which of the crypto trading platforms you would like to engage with. Some of the outstanding ones that traders engage with are;
• Trality: Trality is THE platform for anybody who wants to profit from algorithmic crypto trading without giving up the day job. They offer some state-of-the-art tools to create highly-intricate, super creative algorithms within an educational, community-driven infrastructure that promotes learning and development as a trader.
• Blackbird Bitcoin Arbitrage: This is known to be the best for those who are just starting out at trading. This particular automated trader platform does so to look out for prices on the market and then compare those prices. Once there are inconsistencies in the trade, the bot automatically takes advantage of it and makes a transaction. What makes this particular bot unique is that the person using it does not need to sell any tokens; the software is programmed only to take advantage of gaps in the market.
• Catalyst Enigma: It serves as a store for python written cryptocurrency assets. It supports the live-trading of some crypto-assets: Bittrex, Binance, Poloniex, and Bitfinex. With this bot, traders can run their current strategy against existing and past ones to reduce losses and mistakes. Catalyst is all about data; on the catalyst, investments are made by building data.
• Superalloys: The automated crypto platform is commonly used by users that are not soo technically inclined. The language of the software is straightforward, such that a trader who has no understanding of coding can conveniently make use of it. Superalgos has a lot of unique features. It has tried to integrate every part of automized crypto trading.
How can Automation Help Crypto Investors Trade Smarter?
The fact is that automation in the crypto world, like any other form of technology, has made life easier for investors who trade cryptocurrencies. There are many ways in which using an automated crypto trading platform or a crypto bot helps investors trade smarter. We would be highlighting and discussing some of them below:
• It reduces the amount of time an investor needs to spend trading by himself. With the crypto automation program, he can do other things while the bot monitors the market and trades for him using the already programmed data.
• Because it is an already programmed software, there is no time limit to the trade being carried out; the crypto bots are constantly trading on the market 24/7, which helps a crypto investor take advantage of the market. Since the bot operates 24/7, it would be easy to know when the market is down and when the market is booming. The bot would also be able to quickly catch when there is a gap in the market and trade on behalf of the crypto investor.
• Making use of crypto automation software helps to reduce mistakes. Because it is a computerized system that has already been programmed, the chances of the bot making mistakes while trading is very low; this is against it being human trading; there is a high chance of making mistakes.
• Once a crypto trade is automated, it is difficult to tamper with it unless it is reprogrammed. No external factor influences an automated crypto's software; they only operate whatever command has been programmed into them. This serves as a way of ensuring that the transaction is safe and secure.
• Automation makes a trader more disciplined. There is always this tendency to want to put more money at the wrong time when trading. A trader can be trading based on emotions, which can affect getting a good deal in the market. A bot would only give out what has been programmed into it; in a way, we can say that the bot can be more logical and clear-headed than the trader himself.
• With some automation crypto platforms, you can have your trading strategy and backtest to ensure it is effective and viable.
As great as automation is, it also has its downsides. Some of these downsides are;
• As much as you try to program all your possible trading strategies into the crypto trading automation software, the cryptocurrency market is very volatile, and a trading strategy can become useless in a very short time. The prices and market value of cryptocurrencies may change.
• We have mentioned in this article that using a crypto automation bot to trade helps to a considerable extent secure the transaction. However, because cryptocurrencies have to be held on crypto trading platforms, they are at high risk of being hacked while on that platform.
• A bot is a machine, and so it can crash at any time. There could also be breaks and a lack of proper network connection, which may then affect a trade being carried out at that particular time.
• The trader can suffer losses because of the inflexibility of the bot; a transaction may be carried out by the crypto automation software and may not be in alignment with the realities of the market at that time.
Conclusion
Inferring from all that has been discussed in this article, automation goes a long way in helping the investors be more intelligent in their trading and having an easy trade. They allow the investor to monitor the market and carry out other commands that have been programmed into it. Despite the fact it is a good evolution to the crypto world, it also has its disadvantages.