A Beginners Guide to Trading Bots

The clock never stops for anyone and the financial market is no different, particularly when they are dealing with the volatile market of cryptocurrency trading and that’s why an expertly calibrated, secure, and reliable strategy for trading is crucial. In contrast to traditional stock markets, cryptocurrency trading never stops and makes it nearly impossible for traders to monitor market movements as well as diversify risk, decrease errors, and maintain a strict trading policy seven days a week, all year.

If, of course, you’re in need of assistance that’s where cryptocurrency trading bots can help.

What are trading bots?

Bots are simply a program, which runs through the Internet and is able to perform repetitive tasks with greater efficiency than human beings. Some estimates suggest that about 50% of all traffic on the internet is composed of bots who interact with web pages and users, search for content, and complete other tasks.

The bots for trading in cryptos work on the same fundamental premise. They’re programs that perform actions using artificial intelligence, using predetermined parameters. Don’t miss trades or opportunities through the use of an array of algorithms that allow you to buy and sell assets in a quick and efficient manner all day or night, from any location around the globe.

How do these bots work?

Through direct communication with cryptocurrency exchanges and putting orders in a timely manner based on your pre-set conditions, trading bots provide incredible speed and effectiveness, and also reduce mistakes.

Bots for trading work through three key steps: the signal generators, risk management, and execution.

  • The signal generator is essentially the job of a trader by formulating predictions, and also analyzing potential trades using the market’s data and technical analysis indicators.
  • The term “risk allocation” is a reference to risk allocation as the process whereby the bot allocates the risk in accordance with a certain set of guidelines and parameters established by the trader which usually includes the manner in which and how much capital is allocated during trading.
  • It’s time to go. Execution is the process where cryptocurrencies are purchased and sold on the basis of signals generated by the pre-configured trading systems. In this phase, the signals will be transformed to API crucial requests so that the cryptocurrency exchange will comprehend and process.

Trading without emotion

There are many reports that say that over 80 percent of traders are unable to make money due to a myriad of reasons. Trading in volatile cryptocurrency is very emotional and, with emotions, come mistakes in judgment. Up to 39% of trades made manually are dependent on our emotional state and can cause us to make uninformed decisions. It’s just human psychology.

Instead, join the 20 percent of smart traders who earn money by using the potential of trading bots to provide a calm and systematic approach to trading.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.