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Everything You Should Know About Bitcoin Trading Robots

Everything You Should Know About Bitcoin Trading Robots

Trade in the ever-moving bitcoin market can be extremely stressful for traders and investors as it is highly volatile and never pauses, not even at night. Imagine waking up in the morning only to find a surprise (pleasant or unpleasant). Now that the stats reveal blockchain market size will reach $57 million in 2025, the stakes are really high.

This unstable nature of the bitcoin market has led to the increasingly popular demand for trading robots. Trading robots or just bots are active all the time. This means that traders can control their trade even when they are resting.

What are Trading Bots?

A trading bot is essentially a software program which can directly interact with financial exchanges and place orders for you depending on market condition. It has a set of predefined rules depending on which it reacts to the various ups and downs in the market.

These trading bots are also capable of carrying out trade in a more efficient manner and with better speed than the trader. They can either be used from open source platforms free of cost, or its license can be purchased.

Why You Should Use Trading Bots?

1.    Time-saving

The bitcoin bots, once programmed, operate automatically. This saves a lot of time which would otherwise have to be invested in analyzing the market conditions at all times. If a trader uses these bots, he would not be required to monitor the market continuously.

You might be wondering if the bots are capable enough to make the right trade decisions! Yes, the bots work accurately according to the algorithms specified and make all the right moves, thereby ensuring you higher chances of success.

2.    Setting Your own Trading Strategies

Every trader has its own strategies and preferences and the rules set in the bitcoin bots can easily be modified depending on the market trends. This means that you are free to change your strategies at any time and maximize your trading options.  

3.    Operational 24×7

The market is active all the time. And the truth is that it is not possible for a human to watch it operate all the 24 hours. Bitcoin robots can solve this problem.

These bots never sleep, even when you do. This means that no trade opportunity will be lost when you are busy in some other work or are unavailable to monitor the market trends.

4.    You can track it from any location

Since the system is web-based, you can keep track of your money from any location. This means that even when you are on a vacation, you can still be aware of your trade with the help of bitcoin robots. All you need is an internet connection.

5.    Speed

In bitcoin trading, your moves need to be exceptionally fast or else you can miss out on some valuable opportunity. The bots are more efficient in this than humans. They can notice all market changes in real-time and take action accordingly. This is difficult to do manually and hence, speed is a crucial aspect in bitcoin trading.

What are its Different Types of Strategies?

Since different traders have different trading strategies, the types of bots they employ are also different. Here are the most popular ones:

Arbitrage

Arbitrage is the trade that goes by buying assets in one market and selling them in another at a higher price and thereby earning the profit. The trading bots are quite capable of locating the price mismatches across various exchanges.

Market Making

This strategy involves simultaneously placing buying and selling orders in an effort to capture the spread between the buy and sell price. For example, if a company is trading at Rs. 15,000, you create a buy order for Rs 14,999 and a sell order for Rs 15,001.

When both the orders get filled, you earn Rs 2, which is the spread. This strategy may be profitable at certain periods, but due to the intense competition, it is becoming unprofitable, especially in low liquidity environments.

Do Trading Bots Really Work?

According to its programmed algorithms, the bitcoin trading robots react to the market. Most bots also use an EMA (Exponential Moving Average) as a starting point or market analysis. These EMAs are based on past trades, which are not indicative of the future.

While there are many benefits of using these bots, forming the correct strategy is the most crucial step to guarantee success.

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