In this article, we will talk about Automated trading bots in digital currencies.
The role of robots in cryptocurrency trading:
Cryptocurrencies are known to be incredibly volatile, as prices fluctuate significantly and this can be within minutes.
The cryptocurrency market is open 24 hours a day, 7 days as the market does not belong to a geographic region or central authority.
Human dealing with the cryptocurrency market all the time is difficult to achieve, due to several factors, the most prominent of which are:
In many cases, investors cannot respond quickly enough to changes in price in order to achieve the best deals available in theory to them. The slowdown in exchanges and transaction times exacerbates this problem.
Investors simply cannot devote much time to the cryptocurrency markets as necessary in order to always achieve the best deals. Doing so requires around-the-clock monitoring of cryptocurrency exchange around the world.
Fortunately for many investors, there are solutions to these issues. One of the basic solutions is robots or what is also known as “trading bots”, or automated tools that manage trading operations and execute transactions on behalf of human investors.
Types of bots:
There are many types of cryptocurrency trading software and tools. One of the most common types is “Arbitrage bots,” according to bitcoin.com. Arbitration bots are tools that study prices across platforms and make deals to take advantage of the variations. Given that the price of a cryptocurrency like Bitcoin tends to vary somewhat from one exchange platform to another, robots that can move quickly enough can overcome platforms that are late in updating their prices.
Other types of robots use historical price data to test trading strategies, which in theory provides investors an opportunity.
Other robots are still programmed to execute trades at certain signals like price or volume.
How does it work?
Investors can subscribe to free robots to help trade cryptocurrencies.
On the other hand, many robots have fees to use, and some can be very expensive.
Investors usually search for robots or robots that will be very useful to them and then download the code from the developer.
Each robot has different software and hardware requirements.
Robots can be incredibly useful, although there is still an ongoing debate about whether or not they should be allowed to trade cryptocurrencies.
In order to increase the impact of the robot, the investor must know the best way to use the tool.
For example, investors must have the appropriate accounts set up via crypto trading platforms.
They must link these accounts with their cryptocurrencies.
In many cases, they still have to make investment decisions such as time to buy or sell; while the robot can execute those orders, there is no substitute for a robust investment strategy.
A cryptocurrency robot can be one of the quick solutions to winning the time and effort needed to succeed. Many robots can provide marginal returns when working properly.
While there are many robots that are not well designed, and investors must remember that the encryption space has not yet been organized, and therefore it is possible to fall victim to some of them.
Most importantly, the successful use of the robot requires deep knowledge of the crypto markets and an excellent supportive investment plan.
For some investors, a robot can be a useful tool to help trade cryptocurrencies. For other investors, the time they devote to preparing themselves so that they can trade profitably may not need robot services.
By community member Dina Mahmoud