Crypto trading has been significantly simplified from the early days of the crypto industry, but even so, trading digital assets is still not that easy. Experienced traders who got the hang of it a long time ago might tell you that it is perfectly simple, and to them, it does seem like it. However, for a newcomer to the crypto trading world, there is a lot to keep in mind - often too much.
This is why crypto trading bots were invented. They represent software solutions that you can hire to trade on your behalf, and all you need to do is set them up. If you do it right, the bots can yield some rather impressive returns very quickly. But, in order to do that, you must first understand how they actually work.
How do crypto trading bots work?
Trading bots have been around for a long time. You may have heard of some of them even, such as BlackRock's Aladdin, which emerged in 1988. Back then, there was no crypto to trade with, of course, but the bots existed long before the crypto industry, used in traditional finance.
Over the years, they evolved, and when they started working with crypto, they became simpler to use, just like crypto itself.
The first thing to understand about them is that they will trade on your behalf, automatically. However, they are still just computer programs, and as such, they are not fully automatic. They can buy, sell, hold assets on your behalf, and even apply strategies, but only if you instruct them to do so.
In other words, they require you to set them up by giving them parameters that will guide their actions. Bots for crypto trading need you to tell them the conditions under which certain actions will be performed. Once that is set up, the bot will monitor the market, and once the conditions are met, it will react immediately.
Advantages of using trading bots
The main advantage of using them is their speed, as they can react momentarily and even make trades for multiple coins at once. They process information much faster than any human ever could, and, once again, they can do it for multiple cryptos at once.
They also eliminate human error, which is a common problem in trading, especially when a human is trying to react quickly to market changes. Bots also trade with no emotions which might force you to make a bad decision due to fear or greed. Bots simply do what they are tasked to do, when the right conditions are met, and that's it.
How to set up a trading bot?
Crypto trading bots can take over most of the difficult work. Your first step in setting them up is choosing the right one for you. Once you select one and set up your account, it will be time to set up the bot.
Start by selecting which pair of cryptocurrencies you wish to trade, and the bot will start monitoring it. Next, you need to set up a number of parameters, such as the buy/sell price range, risk that you are comfortable with during trading, as well as some risk management tools.
After these parameters are set, you will also need to decide on the amount of money that you wish to give to the bot. The bot can only trade if it has some starting capital, which will, hopefully, grow as a consequence of the bot's actions. Ideally, you should give it as much as you are willing or able to afford, as a greater amount allows for a larger spread and volume. You can also instruct the bot about specific amounts that you want it to use per trade or even have it trade only on specific platforms.
How to pick the right bot?
Some bots are more flexible than others, so there is a lot of research involved in finding which bot to use and then learning how to set these parameters accurately. Remember, the bot will do everything you tell it to, but if you supply it with bad instructions, it will be limited by them, and it won't be able to make good trades.
Whilst even the most proficient trading firms or hedge fund management companies are prone to human error, this automated software continuously improves its market-predictive abilities with each new trade. Some of them boast a success rate of up to 98.8% at trade speeds of 0.01 seconds. The biggest challenge is discerning the reliable ones from their fake counterparts impersonating otherwise legitimate brands.
This is the uttermost reason why it is crucial to always read the reviews, impressions, and reports from trusted finance sites. These sites are serious about their business, and they have extensively vetted all crypto bots on the market. This is extremely important since bots are not regulated, and anyone can create one and let others use it, which can be dangerous. There are far too many instances of fake websites purporting to offer legitimate automated trading software which could be easily accessible from any search engine. Keep in mind that this means that hackers can make bots and leave them in the open, waiting for an investor to supply them with money, which the hacker will then steal. Sites such as CoinBharat specialise in vetting and reviewing the best bots for crypto trading in order to protect clients from potential scammers and bad actors while letting them choose from the best performing bots.
Until better regulatory efforts emerge for this technology, it remains imperative to always select a crypto trading bot that has been vetted and extensively verified by a legitimate finance site. These sites also include links to the legitimate versions of the brands. Merely Googling the brand name could make you inadvertently land on one of the many scam websites impersonating that brand. This is why it is important to always go through such review sites the likes of CoinBharat when choosing a crypto trading bot to deposit with.
