The automated crypto trading process is executed by a trading bot, which is based on a specific set of mathematical and statistical rules. These rules are generally applied to fluctuations in price and volume of crypto pairs and are devised as per the technical analysis. Automated trading bots place the trade orders on behalf of the traders and enable them to execute more efficient trading without having to stay acquainted with the market trends at all times.
The algorithm of a trading bot examines the market to unearth the best trading opportunities according to the pre-defined or pre-programmed trading rules. All you have to do is choose the best site to buy and sell bitcoins having the ability to generate any orders for protective stop losses, trailing stops and profit targets as soon as the trade is entered.
There are ample benefits of having a trading bot to monitor the market actions such as orders, volume, price and time, and execute the trades. Some of them are listed below:
Ability to backtest : Backtesting implements pre-programmed rules to determine its profitability and risk. All these rules should be very-well defines, with no room for interpretation, while designing the best coin exchange for automated crypto trading. The traders can test these rules on historical market data before putting their money in live trading. Meticulous backtesting offers helpful statistics to evaluate and finetune a trading idea, and determine the system’s expectancy – the average amount a trader can expect to win or lose per unit of risk.
Improve order entry speed : Since trading bots respond quickly to changing market conditions, the automated system generates orders, including protective stop losses & profit targets as soon as the trading rules or criteria are met. Getting in and out of a trade a few seconds earlier can bring forth a huge difference in the trade’s outcome. The markets can change swiftly and it is dismaying to have a trade reach the profit target and then blow past a stop-loss level, and such concerns can be radically mitigated by automated trading.
Achieve consistency : Planning a trade and executing it accordingly is one of the biggest obstacles in trading. Even if your trading plan is amazing and has the potential to offer huge profits, overlooking the system’s rules can result in changing the system’s expectancy and lowering your profitability.
Preserve discipline : Due to the automatic execution of the trades as per the specified rules, discipline is preserved even in volatile markets. Discipline often dissipates when emotional factors such as fear of taking a loss, or the desire of obtaining a little more profit involved in a trade. The automated crypto trading system ensures the elimination of such emotions and maintenance of discipline to process the trade as per the plan. Besides, “Pilot Error” is mitigated. For example, an order to buy 100 coins will be more accurately entered than that of an order to sell 1,000 coins.
Diversify trading : Automated trading allows users to trade numerous accounts or various strategies at once. This has the potential to spread risk over a host of cryptocurrencies while creating a hedge against losing positions. The trading bot successfully executes the processes in milliseconds which can be very challenging for a human to accomplish. It can also scan trading opportunities across a variety of markets, generate orders and monitor trades with no point of error or failure.
In a nutshell
Automated crypto trading can yield ample merits when they are configured and backtested in a proper manner. But before embarking on a trade, it is crucial to plan a strategy and figure out how it will work in a bull, bear and sideways market in order to gain high profits.