Lightning-fast analysis capability and acting on the analysis really quickly to make a profitable trade are the two most crucial prerequisites if you are contemplating full-time trading. However, not all of us are pro traders.
As we know, time and tide wait for none, and time is money in the most literal sense as far as the crypto market is concerned. Anything can happen within seconds; a single wrong trading decision can push you toward hefty losses.
The problem with the crypto market is it is exceptionally volatile because the fluctuations don’t stop, contrary to the conventional financial market. Hence, even seasoned traders find it challenging to keep a tab on the crypto market movement and diversify the risk.
So, what can you do? The simple answer is you must rely on well-analyzed, safely fathomed, and fast trading strategies. But, you are a newbie with little experience and already scared. Also, you take time to analyze the market movement and act. Sorry, the crypto market is not for you; unless you resort to some automated assistance.
Confused? Well, trading bots can save you big-time. These AI-driven bots are more efficient than humans in understanding different situations in the market and acting on the same. For example, if you enter the crypto market right now and opt for the assistance of a trading bot, the bot will analyze and decide the best time for buying or selling Dogecoin or say Bitcoin.
Are you interested? You should be because there’s more a bot can do:
Zero Impulsive Trades
Bots are automated programs. Hence, making hasty trading decisions out of FOMO is out of the equation. In most cases, traders lose their money because they are driven by emotions leading to erroneous judgments. At least 20% of traders make intelligent choices by relying on bots that are anything but emotionally driven.
Trading across a varied number of exchanges and multiple crypto-pairs simultaneously is easy when you use a trading bot to your benefit. Now, you may ask, why should I trade across so many exchanges? Your exchange might not have the asset classes you might be looking for. This is why using trade bots can be superb.
Trading in the crypto market requires speed and decisive nature. But, many crypto traders suffer due to indecision. These bots process orders within seconds. As a result, there is minimal wastage of time in deciding whether to carry out the trade or not. The greater the market volatility, the faster the orders are processed. Hence, the likelihood of making a profit increases tenfold.
Perfect For Practice
If you want to master the art of crypto trading, backtesting and paper trading are the two most vital practicing methods you can’t avoid. You must understand the historical trend of a cryptocurrency, its patterns, and more to devise a strategy that works.
The bottom line is that planning a trading strategy doesn’t mean it will help you make a profit all the time (it is improbable), but at least you will get an idea of how frequently the strategy works or doesn’t work at all. With enough tools in hand, experience, an almost on-point data set, and confidence, you can explore more and stake your money with adequate understanding.
The best thing about open source bots is that you can check their working procedure anytime.
Bots can help you with risk diversification by balancing your portfolio. The highly volatile crypto market is unpredictable. But, it is best to keep your eggs in different baskets instead of putting them all in one basket. It all boils down to reducing the exposure of one specific asset for an optimum risk-to-reward ratio.
Sticking To Discipline
As stated above, your risks can be minimized with some assistance from a cryptocurrency trading bot. The particulars of the deals the bot is supposed to perform can be specified by defined rules that traders might want to establish, thereby sticking to discipline consistently.
Furthermore, the bot can cancel all open orders and exit the marketplace. Your likelihood of losing a sizeable portion of your wealth will be pretty less when trading discipline is followed religiously.
Both novice and master traders use trading bots to gain more from the market. It is a time-saving tool that ensures that you keep your position strong in the market round the clock. However, before using any bot, be 100% sure it works well by looking at its history and what veteran traders have said about it. If it is well-tested and found to be well-performing, go for it!