The technology of automated trading goes as far back as the 1970s, when the retail traders began using it in the foreign exchange market to trade several contracts. With the passage of time, auto trading has become more widely acknowledged and utilized across different markets due to the several benefits it provides to its users.
In this article, our main focus, however, will not be on the fiat or capital market, but on the cryptocurrency market. The cryptocurrency was introduced into the global market upon the invention of Bitcoin, back in 2009. Soon, auto trading was also adopted in the virtual currency market. However, unlike the foreign exchange markets where the auto trading goes on for a definite number of hours per day, the auto trading which the digital currency investors use in this market operates throughout the day – all 24 hours, the whole week.
What is a cryptocurrency trading bot?
Cryptocurrency trading bots, in simple terms, are software programs which utilize Artificial Intelligence (AI) based on algorithms and machine learning in order to analyze the market conditions, and conduct automatic trade based on predefined set of instructions and codes, to maximize the benefit for the user.
These bots generally create profits through these trades for their users, and this profit is greater as compared to buying and keeping the crypto coins yourself due to the inherent risk. Bitcoin Compass is a very good auto trading platform, which uses advanced AI to conduct online trade and maximize the user’s profits.
The general belief in the market is to generate as greater return on the crypto investment as possible. But in essence, the real deal lies in generating relatively greater amounts of risk-adjusted returns. This is exactly the principle which the auto trading bots work on.
Although auto trading bots work by themselves, you should not just use them and completely be unaware of it. Here are 4 best ways we think you can manage your crypto on auto trading platforms more efficiently and effectively:
Search and Get Familiar with the Features of Auto Trading
It is very important to learn how the auto trading bots work and employ their underlying algorithm to conduct buying and selling of the crypto, as different platforms work differently, based on the variation in their algorithms and codes. Not only will this make you more aware of how this system works, but will also allow you to analyze the degree of credibility the platform offers i.e. how accurately the bot analyzes the market conditions and its precision.
Make Sure the bot is Back-tested Before Using it
Ensure that you back-test the platform with historical data to observe how accurately the bot works. There are different platforms which provide you with the option of backtesting before using it. The backtesting of a trading bot will make you more aware about its performance and will allow you to actually test it beforehand for various market conditions such as highs and lows or volatility.
Expand your Account on the Automated Trading Platform
Some of the auto trading platforms for crypto give its users the option of incorporating and managing more than one trading account on several exchanges. There are multiple pros of collectively placing your digital currencies on different platforms. These include the possibility of gaining maximum collective profit on them and spreading the individual risks of the digital currencies across all, minimizing the total risk. This technique will also save the investor from threats and their effects such as the unforeseen hacking or systematic failure of one platform. It is well known that a variety of trading assets generally bring forth great rewards for the finest exchanges.
Examine and Compare Your Trading Platform’s Performance with Others
In order to ensure that your bot is working accurately and is free from any systematic anomaly, always contrast the performance of your platform with that of others. This also ensures that your bot is not giving preset results and is giving real-time results. However, you should know that the crypto market is usually volatile, signifying that you cannot always make profits or go into losses.
A Last Word
To sum it up, these are just some of the ways we have identified for you to effectively manage your crypto via automated crypto trading platforms. There are surely other ways as well which you can learn by doing an extensive research, both online as well as market research. At this time, when you are busy elsewhere, we believe auto trading platforms are a go-to option, which allow you to usually make great profits with minimal supervision.