21 mayo 2024
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Automated Trading in the Crypto Market: Pros and Cons of Using Trading Bots

Modern automated trading systems are really good at following rules and can even trade on their own when they use advanced AI technology. A modern crypto trading platform that offers various forms of automation will improve the consistency of your trading strategy and allow you to raise your investment game to the next level.

Advantages of using trading bots

Automated trading systems are created with bots, which are scripts that can be triggered by signals or alerts from analytical platforms such as TradingView and execute instructions on selected centralized crypto exchanges. For example, WunderTrading is integrated with Binance, Kraken, KuCoin,OKEX, and many other CEX websites.

People use these bots for various reasons. However, some advantages of introducing automation to your trading strategy are quite apparent:

  • Bots allow you to stay active in the market around the clock 7 days of the week. Since the crypto market operates 24/7 with some geographical zones providing more activity than others during certain periods, retail traders who can continue using their strategy throughout the day will outperform those who miss out on valuable trading opportunities.
  • An automated crypto trading bot won’t have any lapses of judgment or other issues that are common for human traders. The sad reality of being a human being is that we make mistakes and hesitate when acting and following instructions is the best course of action. A script does not have any weaknesses that our nervous system has inherently.
  • The direct connection between all three components of an automated trading system (a single generator, automation vendor, and exchange) allows bots to instantly react to the market and execute their instructions without any delays. It means that any idle time is completely removed from the equation and the system will perform as efficiently as possible.
  • Crypto automated trading is quite cheap compared to what it was just a couple of decades ago when only huge financial institutions could afford running algorithmic systems that anticipated market fluctuations. Modern retail traders usually pay just under a hundred bucks to access the most advanced technology available to investors in the 21st century.

These advantages are apparent ones. However, you should also remember that there are many hidden upsides to using automation. You can build unique trading systems, test all your ideas without risking any money, and integrate as many interesting indicators and strategies as you like.

Disadvantages of using automation

There are several key issues with using automation for building ATS. These are especially important for retail traders working with cryptocurrencies.

  • You do not have full control over your financial operations. When bots take over, they act autonomously (within certain limitations). It is a great thing when you need to increase efficiency at any cost. However, you may be quite uncomfortable when seeing how bots lose money during periods of market volatility.
  • Bots require constant supervision. While many people talk about bots like something that does not need any maintenance, the reality is that bots are just another form of passive investment that requires fine-tuning, adjustments, and direct management. You need to audit the performance of your ATS regularly and change its settings when necessary.
  • Paying for a top tier subscription is a must. You will need to run dozens of bots to build a system that performs well and can be expansive enough to allow diversification within itself. What it means is that you can set up some bots to run extremely risky yet rewarding strategies while protecting your portfolio from risks by also having something like a DCA bot running in the background and making money safely.
  • You still need to be good at technical analysis. Despite what many uninformed people tell you, bots do not work without your initial input. You are ultimately responsible for choosing the right analytical approach, testing your ideas, and generating signals for the trading system. It means that your expertise is still the decisive factor in the future results of your bots.

What is the best automated crypto trading platform?

When it comes to delivering an excellent level of service and the most flexible set of tools to build unique ATS, WunderTrading comes to mind among the first. It is a great technological platform that allows its users to use a wide range of interesting financial tools to up their investment game.

Here are some of the products that may catch your attention on the WunderTrading platform:

  • DCA and GRID bots. These preset solutions are here to immediately offer you something safe and consistent. These bots use a century-old approach (Distributed Cost Average) to reduce risks associated with acquiring resources or taking a long position.
  • The Marketplace. If you are not confident in your skills and experience, you may find social trading a good alternative to active trading. Simply go to the Marketplace on the website and choose retail traders and managers you want to follow. A newly created bot will copy their actions on your account.
  • Custom bots. If you have a good strategy that you want to automate, simply deploy it on the TradingView platform and make it produce signals. These signals can be acquired by WunderTrading bots via web-hooks and act as triggers. When bots receive these alerts from TradingView, they immediately execute their instructions.

What is automated crypto trading? It is a way to trade consistently without ever swaying away from your chosen strategy. It is also a good way to increase the efficiency of your investment routines. If you choose the right provider of automation services, you will be able to create excellent bots capable of reliably generating profits.

Should you start using trading bots?

Contemporary investing in the crypto industry is quite complicated and the competition is rough. You need to leverage the power of automation and portfolio management tools to increase your chances of outsmarting the market and achieving success. Automated trading systems can be very efficient and generate profits reliably if you have a good technical analysis strategy to use.

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