HOW DO CRYPTOCURRENCY TRADING BOTS WORK?
The trading bot itself is a software product consisting of a set of indicators and parameters that automatically track market changes and manage transactions. That is, in fact, such a bot simply follows the chart of a certain currency pair and decides whether to sell or buy the currency. At the same time, as a rule, bots work exclusively with one pair - this allows you to make decision making more balanced.
I want to note right away that bots are not a panacea. It is not worth expecting a profit of 200-300-400%. The robot does not always make truly profitable decisions. Usually, the income from such a bot is 1-2% per day, but you should not forget that sometimes the system can even lead you to a loss. Learn more about coinbase trading bot at our official website.
CRYPTOCURRENCY TRADING BOTS: VARIETIES
There are several main types of cryptocurrency trading bots, depending on the mechanism of their work:
- Trading bots. Such bots make decisions based on the indicators that the user sets them. Due to the wide customization options, various indicators can be combined to create your own trading signals.
- Arbitrage bots. Bots of this type are focused on making a profit from the difference in price on various exchanges. They track the course on several resources, buying where it is cheaper and selling where it is more expensive.
- Order bots . These bots are the most primitive in terms of the market analysis mechanism - they simply follow trends. For example, if most of the traders open sell orders, then the bot does the same.
Many include trading scripts that track the state of the market, changes in rates, reaching certain levels, etc., notifying the user about it, in a separate category. Although it is impossible to call such tools bots, because they do not affect trading in any way without the participation of the trader himself.
WHO CAN CRYPTOCURRENCY TRADING BOTTS BE USEFUL?
Of course, due to small profits and rather dubious efficiency of trading bots, experienced traders do not use such tools. First of all, they are focused on the following categories of users:
- Beginners who do not want to risk their own funds. Bots will allow you to receive stable profits in small volumes, as well as provide an opportunity to analyze trading behavior.
- Users for whom trading is only a side source of income . If you do not want your funds to lie idle while you, for example, mine, you can put them into circulation using bots.
- Users who want to increase their trading income by working simultaneously on several exchanges. The bot can carry out transactions on one platform, and the trader himself on another.
Of course, this way of trading has its own risks, which should be discussed separately.
WHY CAN CRYPTOCURRENCY TRADING BOTTS CAUSE YOUR BANKRUPTCY?
First, cryptocurrency trading bots are a great scam tool. Users trust such systems with their funds, which can then simply be withdrawn from the system. Therefore, it is important to carefully approach the choice of a bot. The ideal option is to hire a programmer who will write a bot for you. Is the game worth the candle? Perhaps a better solution for the same money would be to enroll in trading courses.
Secondly, a bot is a machine that operates according to a specific algorithm. At the same time, the market itself is quite flexible and rapidly changing. Therefore, even if the bot has brought you profit for a long time, this does not mean that it is completely insured against losses. At any moment, everything can crumble like a house of cards.
Thirdly, cryptocurrency trading bots never take risks. As a rule, the slightest prerequisites for a change in the rate become a signal to close the order, so they will not be able to catch profits on peak rises or falls.
Nobody forbids you to get your own trading bot, but it is worth remembering that independent trading will always be more profitable even taking into account the human factor. It is best to use bots exclusively for faster monitoring, after all, machines are able to analyze several resources more quickly. We would not recommend trusting such a trading system.