The crypto trading scene has changed dramatically over the past couple of years. When the 2017/18 bubble burst, Bitcoin was seen as the mad doginance world and only those who were insanely courageous, or perhaps merely insane, would go anywhere near it. Yet here we are in 2020, the waters of volatility have calmed and both individual hobby traders and institutional investors are getting into crypto trading like never before.
A major factor in crypto’s rehabilitation has been the arrival of automated trading. Now trading bots in themselves are nothing new. Forex trading pros have been using them for years, and crypto bots are conceptually similar. The big difference is accessibility. The machines used by city slickers in decades gone by cost tens of thousands. Today, anyone can register with a platform like Bitcoinsrevolution and install one on their smartphone for nothing.
What do they do?
Without diving deep into the technobabble, a bot accesses and analyzes data on the crypto exchange on behalf of a user. It does this using API keys, which are essentially login credentials, and can then gather market data and make trades in accordance with its programming parameters and any specific limits or rules that you have set.
Why is that better than doing it yourself?
A trading bot is neither more nor less than a tool. Asking the above question is a little like asking why it’s better to drive into town than to walk, or to use an electric drill instead of a manual one to make a hole in a wall.
Just as a car can travel faster than a human, so a trading bot can think faster. It will be able to analyze data in a fraction of a second, while it might take a human several minutes or even hours. There’s also the question of consistency. Tell the bot what strategy to adopt and it will follow the rules that have been set. It won’t get frustrated if a trade goes south, it won’t get tired if it’s still busy at 3AM (remember, the crypto market operates 24/7) and it won’t get distracted by a family member or something on TV and make a silly error.
There must be a but…
Like any computer algorithm, a trading bot is only as good as its programming. Use a recognized trading platform like the one mentioned earlier, and you can be confident that the bot it is making trading decisions that are logical and reasonable. However, this is a growing market and there are new entrants arriving all the time. Look before you leap, read the reviews and check the supplier’s credentials before you let the bot start trading for you.
Be smart
A good trading bot will save you time, effort and money. However, that should not preclude you from learning as much as you can about crypto trading and understanding the market. Sometimes, the biggest gains can be found by thinking around corners – and that’s one area in which the human brain can still outdo the machines – at least for now.
