The secret to a high-performing portfolio? Automation | Opinion

People engage in “risky” situations almost daily. For some, a risk could be only giving yourself two hours at the airport instead of the instructed three hours before departure time. For others, risk could be associated with a physical threat like skydiving. 

While these examples highlight personal risks, financial risks operate on a completely separate scale, impacting entire markets and economies.

Risk has been closely associated with the crypto market as volatility remains one of its most defining characteristics. Crypto’s volatility means that while its surges can be dramatic, the downturns are often even steeper. Take, for example, this Bitcoin (BTC) price chart, which outlines its intense peaks and dips in just 24 hours. 

A single remark or action by an influential person can trigger an instantaneous response in the current digital landscape, which can eventually affect the entire market. Since Trump’s re-election in November, while many markets have been sensitive to his actions and statements, Bitcoin and other cryptocurrencies, in particular, have faced increased volatility. A post on X or his policy stance has been enough to spark a sharp rise or fall in prices.

The power of such moments was evident last week when Ethereum’s (ETH) price fell significantly following a comment from Eric Trump, son of the US President. He told his followers on X that it was an excellent time to add Ethereum to their portfolios, a remark that caused the cryptocurrency’s value to drop nearly instantly. Some say that the tweet was fueled by his ties to World Liberty Financial (WLF), a crypto venture inspired by Trump that holds Ethereum assets.

The market’s overall skepticism and often volatile influences have made it difficult for investors to maneuver, particularly for those new to the game. New traders are typically filled with excitement during a bull run, only to see the price drop, and then face the panic of potential and often immediate losses. 

Historically, traders depended on their intuition and previous patterns to forecast price shifts. However, traders now have access to tools that use algorithms to understand market conditions and trends, allowing them to execute data-driven decisions. This shift has been seen in traditional finance, where “robo-advisors” have surfaced as automated services that use analytics and algorithms to provide personalized wealth management advice. 

As a result, manual portfolio oversight is no longer an absolute necessity, and in crypto, bots can now execute trades on behalf of users. While investors set specific parameters, the algorithm acts accordingly, even in the absence of the user, ensuring that no trade is missed.

Several automated trading platforms exist, each providing tools to streamline the trading process. Intellectia.ai, for example, uses AI to analyze market data and make predictions, optimizing trading strategies based on market conditions. It can summarize large amounts of data according to market trends, financial reports, and news articles and turn those into actionable insights. While it’s a powerful tool, its advanced features could appear overwhelming for beginners, especially for those who are not as familiar with AI-trading strategies.

3Commas is another trading platform that uses always-on automated bots to execute trades based on pre-determined strategies, facilitating more favorable outcomes for investors. It provides a variety of trading bots, from DCA (Dollar-Cost Averaging) to GRID trading bots, all of which can be altered for newcomers and experienced traders. However, compared to other platforms, 3Commas is suited for more professional traders with prior knowledge of the market, offering advanced features designed for those interested in crypto. 

While oversight is helpful in many situations, allowing algorithms and machine learning technologies to take the lead in trading has become a promising advantage for investors. By reducing human error and emotion-driven decisions, automated trading allows for more consistent and positive outcomes, making it a valuable and indispensable tool in the risky world of crypto.