The cryptocurrency market is huge; it’s expected to hit $1,758 billion by 2027 and shows no signs of slowing down. One tool that’s helped traders execute their tasks is crypto trading bots.
Crypto trading bots have increasingly been gaining traction amongst cryptocurrency users across the globe. Trading bots can help traders grow their trading and scale it to new levels.
Cryptocurrency trading bots are software programs that allow you to trade on exchanges automatically. Rather than entering each trade manually into the exchange, the trading bot can take data from your exchange account and place trades automatically.
The entire process is executed through computers, thereby guaranteeing precision and speed that was previously not possible. These trading bots rely on algorithms created by application developers.
Why Do Traders Use Bots?
Inherently, trading bots automate tasks that are too time-consuming, challenging, or complicated to carry out manually. These tasks can either be very sophisticated or very simple.
In fact, the best crypto trading bots are equipped with the capabilities to implement an entire portfolio management strategy and help traders save a lot of time. So you don’t need to be continuously online for trading bots to do their work; bots can take control of your exchange and implement your strategy any time of any day.
Bots can save traders a lot of money, collect data, and analyze it at lightning speeds.
When Should You Use Trading Bots?
Bots can perform an unlimited range of tasks for traders. There are various bots available that can rebalance, manage portfolios, collect data, amongst other tasks.
This ease doesn’t mean that traders should get bots to do everything, since that actually might end up being too time-consuming. The key is to find the most complex tasks and assign bots to carry those out.
Before you begin your search for a bot, you need to think of the most complicated aspects of cryptocurrency trading and break those down to a series of tasks. The most significant of those tasks, which, if they were automated would make things easy should be highlighted.
To determine which tasks would benefit from automation, it’s vital to decide which areas bots help. They can help you save time on mundane tasks, thereby allowing you to focus on your crypto portfolio more. In particular, bots can help out with the following tasks:
Nobody likes doing repetitive tasks that are too time-consuming, especially if they’re taking away from other, more important things that require your focus.
Trading bots for such tasks perform copy-paste functions that allow them to execute one task repeatedly without your interference.
All you have to do is set up the bot and work with it once. After this, it’s copied and can be executed whenever you want. For instance, if a task such as rebalancing your period every hour would improve your overall performance, you can get a trading bot to carry out all the functions required. This way you’re able to skip the mundane, repetitive tasks.
Cryptocurrency requires an immense level of precision. While traders who are new to the game may not mind a lower degree of imprecision, other experienced traders need a higher degree. Every trade will impact your overall performance, so it’s vital to select trades carefully.
Bots can help enhance your overall precision. In other scenarios, when you want to execute a trade at a specific price, for instance, doing this manually would require immense patience and skill. Using a trading bot, you can execute a precise strategy through constant market monitoring. You can set conditions for when the trade is executed, making the bot quick, reliable, and accurate, for the execution of trading strategies.
Cryptocurrency trading functions take time to execute, and even something as regular as portfolio rebalancing may potentially take at least 15 minutes of your time. If, for instance, your portfolio is very diversified, it may even take more time.
Using trading bots allows you to automate tasks that are typically too time-consuming. Since they’re computer-operated, they can instantly perform calculations and process trades without the need to take breaks.
All that’s needed to automate a task that would otherwise be time-consuming is a few configurations away in a trading bot and letting it do all the work.
Trading on the cryptocurrency market never stops, even for a second. Even one exchange goes down in case of updates or maintenance, and another one is still up and running. The fact that the market is operational 24/7 makes it possible for traders to constantly monitor their portfolios.
Using a trading bot that’ll automate your strategy can help out by keeping up with a market that doesn’t stop working. You can use a combination of strategies that’ll work during different parts of the day. Regardless of what this strategy is, bots can help you execute a strategy while sleeping at night.
Cryptocurrency trading is quite complex, and that’s challenging for many traders to follow. Fortunately, with the use of trading bots, many complicated tasks are simplified. In fact, due to their immense complexity, it would be extremely challenging to manually execute some of these tasks.
However, by combining crypto trading bots with skill development, traders can master the art and learn from their mistakes and strategies. They can assist the most experienced traders and help them enhance their strategy.
By helping you improve your efficiency and making it easier for you to build your skill and enter the industry, crypto trading bots are definitely an option worth looking into.