There are currently more than 34 million people in the US who own cryptocurrency.
Buying and selling crypto presents a lot of opportunities to make profits, but it can be very difficult and time-consuming. Automated crypto trading can be one of the most efficient and reliable ways to trade crypto, and it has several advantages over manual trading.
So what is automated crypto trading, and how can it help you? Keep reading to find out.
Automated crypto trading uses software that will buy and sell crypto for you. Various platforms are available, and they have bots with different features so that you can select how your crypto is traded.
Crypto trading bots are generally APIs (application programming interfaces) that will trade your crypto through a third-party exchange such as Binance, Kraken, or Bitmex.
Some bots work through smart contracts on the blockchain rather than an API or website. It might take some time to find the best-automated crypto trading platform for you, so you should do some research into the various options.
Once you’ve set up an automated crypto investment, you can leave it to run and it will continue to trade to the parameters you’ve chosen.
By setting specific parameters you can trade crypto when you’re away from your computer. You have the potential to grow your crypto savings while doing other things, making more efficient use of your time.
One of the biggest problems a lot of people face when trading crypto is emotional errors. This can cause people to make bad judgments for fear of missing out on an investment with a lot of potential. Algorithmic trading platforms don’t have this issue, so you’re less likely to make risky trades.
At the same time, having an automated system set up will make sure you don’t miss rare opportunities. Platforms like Haru Invest offer other solutions to generate income from the crypto you already own.
Another benefit is the speed at which bots can trade. They’re significantly faster than a human, making them more efficient. It also takes away your need to sit and watch the market, keeping an eye on the price of different cryptos.
One issue that a lot of people have with crypto is the risk involved. There’s no way to completely avoid risks, but using automated trading can help reduce them. You can use bots to spread your wealth across various exchanges using different strategies.
A diverse portfolio is the best way to protect your funds against volatility. If one coin crashes suddenly, having your funds spread out will ensure losses are kept to a minimum.
While there are many advantages to algorithmic trading of crypto, it’s not a perfect system, and it comes with some drawbacks.
You might end up over-optimizing your system, which can make trades less reliable. A common example of this is when people base their methods on historical data, trying to implement a strategy that has almost 100% profitable trades. Any viable plan will always have drawdowns, so you shouldn’t overdo the optimization if you want it to work effectively.
Things like server issues, slow connections, and computer problems are often out of your control. This can cause issues with an automated trading system, and your trades might not happen as they should.
Many people confuse the terms ‘automated’ and ‘automatic’. Automated systems require input, and on rare occasions can experience errors. You should regularly monitor your system to check for missing, duplicated, or errant orders.
If you’re just getting started with crypto trading, it may benefit you to do some manual trading first so you can learn about the different exchanges and coins. This will also help you develop your strategy. Once you’ve got it figured out you could benefit a lot from automated crypto trading.