Have you dreamed of earning profit while asleep or chilling? Does trading with no worries exist at all, or is it only a myth? Millions of traders worldwide have unlocked this achievement and have plenty of free time by becoming the crypto trading bots’ adepts. Crypto trading that is performed automatically demands the assistance of an algorithm to manage entry and exit operations without regular user intervention. The degree of automation varies from basic trading autonomous approaches to sophisticated specialized solutions using advanced algorithmic trading technologies.
Automated cryptocurrency trading migrated to this industry from Forex and the stock market. Thanks to computer terminals available for installation on your laptop, a trader has the opportunity to assign several transactions to a bot, a computer algorithm. It runs the prescribed commands, assessing the position of assets.
After diving into the industry, you must have come across links to crypto trading bots. These robots are trying to figure out how to simplify their plan and get ahead of the competition. Here we will reveal why the world of automated trading crypto is so magical and beneficial for every newbie in the DeFi and web3 stack.
Why crypto trading bots are useful
How can you trade profitably? This question will be gladly answered by a bunch of “experts” on the Internet. There are articles, books, and even instructional videos. People claim that there are simple rules by which you can predict price changes and make a profit. You have probably heard such terms as “Fundamental Analysis” and “Technical Analysis”. As a rule, ready-made bots work on a couple of signals. This is not enough for convenient trading. Customizable and programmable methods can bring more value. But for their correct use, you need to have trading experience and an understanding of the market and its mechanisms.
One of the approaches used by algorithmic trading companies is Arbitrage. It consists of using the imbalance in the exchange between different currency pairs. For example, sometimes, you can buy 10 Ether coins for 1 Bitcoin, 100 Litecoins for 10 Ether coins, and 1.1 bitcoins for 100 Litecoins. If the commission was less than 0.1 bitcoin, you have earned. A short period of imbalance is called the Arbitrage Window. Usually, its size is units of milliseconds. During this time, trading robot had to have time to detect the possibility of arbitrage and send requests for three trades.
Advanced digital asset users facilitate their daily trading routine by relying on preprogrammed execution techniques. There are many forms of trading bots. Some use the dollar value averaging (DCA) mechanism, while others use Relative Strength Index (RSI) and moving averages. More progressive approaches such as algorithmic trading require a deep understanding of decentralized finance and trading.