Trading robots are actually software programs, a set of written codes, that directly talk with the financial exchanges. These bots place orders, whether buy or sell, on our behalf. A set of pre-written code is present which directs the software to take better decisions. Moreover, these bots are intelligent in itself and learn from the market trends also.
Hence, it is understandable now, that bitcoin trading bots are software programs that perform automated trades and transactions for you in bitcoin. Since cryptocurrencies are highly volatile it takes a vast amount of time to keep track of the fluctuations in price which is bound to leave you frustrated as well as tired. Thus, the development of cryptocurrency trading bots took place.
But, the real question is the process to use these bitcoin trading robots to earn money. Let us have a look on to it.
Bitcoin Trading Robots | The Bots that Trade for you While you Sleep
- First of all, before going for a bitcoin trading robot it is mandatory to do some research on your part also and choose the best crypto trading robot out of the available ones.
- Once you have chosen your bitcoin trading robot, you generally require to register and create an account on the automated trading platform.
- Here your work ends. Now, everything will be done by the trade bot itself. Based on the pre-written set of codes and intelligent learning the robot will analyze the market, build a strategy and generates trading signals.
- The robot will react to the market behavior and will place buy and sell orders on the base of that. No doubt, these orders can be placed manually as well. But, it is, definitely, time-consuming and moreover, with the help of robots, even a sequence of orders can be programmed, known as “pre-ordering” and thus an actual trading strategy can be set up.
- For example, If I have ten bitcoin at a rate of $1000 each and I want to sell them when the price reaches $1200. Instead of continuously monitoring the market, I can pre-program a bot who will the market for me and make the deal, automatically, once the price is at the desired point.
- Based on the outcome of the placed orders; at the end of the day, as a trader, you might end up in making good profits.
But, according to me completely leaving the trade to the bot is not a good idea. Bots, no doubt, can do the trading for you when you are sleeping or stuck up in something else but the experience of a person is irreplaceable. If you are just beginning out in the cryptocurrency field, rather than simply entering the market and letting the automated trading bot do the work for you, it is recommended to learn about certain tips and tricks of the trading first and keep the bot to assist you.
Some bots provide us the option to monitor the trades, which are already performed, as to how they were done. This way we can check out the deals that the bot made for us throughout the day and learn from them.
Also, a majority of these robots come with a loss coverage guarantee. This means for any particular amount of loss, incurred due to the activities of the trading bot, a set amount is insured to the trader.
Hence, these trading robots cannot be termed and categorized as a solution. Instead, they are just tools that facilitate the process of trading for the user. The usefulness of these trading robots depends on their usage and the strategies employed as well. A bot, since they can be highly time-specific, that was written for a particular time-period, depending upon the market situation, may not be good for the other time period.
Should a Trading Robot Be Used?
Well! Using a bot is never a bad idea especially keeping the volatile cryptocurrency market in view. In major cases, if we, actually know, that we made a wrong deal manually and are bound to lose some good amount of money, then a trading robot can save the day for you by reducing that loss.
Moreover, we can always pause the bot, if we feel that we can do manually much better. However, as said above, that bots are highly time-specific, changes must be made to the pre-written code at the backend of a bot so as to reflect the current trends otherwise there are definite chances of a bot to make a wrong decision resulting in a loss.
Now, here, investing in a bot that uses machine learning algorithms to learn from the decisions made by it can be a good idea as the bot will be capable enough to change its strategy from time-to-time.
However, in the end, I will still like to say that completely leaving everything to a bot is not advisable and doing some manual checking, for the activities of the bot, at regular intervals is always a good idea rather than being completely blind.