Do nothing and get money for it? That sounds like an old dream that some apps now seem to promise. In this case, autotrading with cryptocurrencies, so the client doesn’t have to do much at all.
The popularity of such apps is growing and they are also being used more and more often. However, very few people know how exactly such trading bot apps and the technology behind them work.
Automatic trading via an app is possible with many providers, but what are the actual advantages of such a system and where could there be disadvantages? Anyone who is flirting with such apps should definitely inform themselves beforehand.
Especially when trading cryptocurrencies, there are a few things to consider to be truly successful. A closer look at trading bots for Bitcoin and other cryptocurrencies is ready for you, right here.
What is Autotrading with a Trading Bot?
There are several ways to become active in financial markets on your own. This usually requires some of your own work to get informed and watch the prices and rates. How nice it would be if this could be done automatically.
This is exactly what trading bots promise, which are designed to automate the processes of buying and selling. In this case, bots actually mean programs that open or close trades according to previously defined rules.
Autotrading is becoming more and more popular lately as far as cryptocurrencies are concerned. However, the user usually does not have to be completely idle, as he can set parameters.
So, these determined how his money is used at which rates. The idea behind this is that less time is lost in observing the markets. Also, it is possible by algorithms to carry out certain strategies. Today, such an autotrade bots or even a Coinbase Pro trading bot is also conveniently available as apps for the smartphone.
How Does Crypto Autotrading Work?
On the surface, cryptocurrency autotrading apps look promising. Most importantly, they also appear easy to use. However, what is promised up front and what can actually work out are two different things.
Therefore, it is important to understand the technique of automated trading. At the beginning, of course, comes the choice of the appropriate platform. The next step is to set parameters. Here it becomes apparent that experience is an important asset because the parameters – i.e. conditions and rules for automated trading – must also make sense.
These parameters are then used to create an algorithm, so that from now on trading can be done automatically. The preset options refer, for example, to the time of trading, the respective price, or even the desired quantity.
Thus, it can be set that a cryptocurrency is to be bought at a certain amount from a certain price. The app or the trading bot now takes over the monitoring of the market and trades accordingly automatically as soon as the criteria are met.
Which Returns Are Realistic with Bot Trading?
A blank statement about the return potential of bot trading is not possible. The potential return depends on the one hand on the success of the strategy. This success in turn is not a constant. Some strategies work very well in certain market situations, but produce high losses in other market situations.
Trend-following trading systems are an example of this. Lots of Bitcoin bots and other automated trading systems are based on such approaches. The principle: The strategy relies on trading in the direction of the prevailing trend. In doing so, the most favorable entry points are selected.
These strategies work very well in intact uptrends. With moving averages and other indicators, the algorithm can distinguish corrections from the actual trend movement. In the best case, the entry into the market is made at the end of a correction and right before a further upward movement.
In sideways trending markets, such trend-following systems often produce painful losses. The algorithms detect a supposed buy signal and open a position. However, since the uptrend is broken, the market falls afterward instead of rising. This pattern is repeated very often.
Chances of Winning with Crypto Trading Bots
Users are most likely to be interested in their chances of winning with trading bots. After all, automatic trading is only interesting when profits actually come out. And it is precisely from the cryptocurrency market that many expect high potential.
But can crypto bots live up to these expectations? How good are the chances actually? In short, it can be said that there are good opportunities, but the risks do not disappear just because automatic trading takes place.
Cryptocurrencies have a lot of potentials but are also very volatile in price. If you put all your eggs in one basket, you can incur high losses just as quickly. Better chances exist if you diversify your investments and thus mitigate the risk.
For Whom is a Crypto Bot Worthwhile?
There is no lack of providers on the market. There is now a wide selection and new crypto trading bots are opening their doors all the time. However, the question is ultimately for whom these crypto bots are actually suitable?
Ultimately, this is also a personal question, because, for some, trading when it comes to finance and cryptocurrencies is also fun in itself. Many enjoy digging through the prices and news to make the best trades possible.
And of course, there are also critical voices that perhaps don’t trust the algorithms too much. In that case, such a bot might not be the right choice either.
But for those who are still newcomers to the cryptocurrency market, an automatic crypto bot might be just the right choice. In this way, the first steps can be taken without having to make too many decisions of one’s own.
Since parameters are also set by oneself, one does not leave one’s investment exclusively to fate either. Plus, everyone also determines how much he now wants to invest and can thus ultimately retain control.
If you are primarily looking for profits without having to do much for it, you can of course also take a look at the providers of trading bots for cryptocurrencies.
The Advantages of the Crypto Trading Bot
At first glance, automated trading really seems to be enormously practical. Just set some parameters, wait and the profits come by themselves. But of course, you have to look in detail at this form of trading bitcoins and other cryptocurrencies.
What are the concrete advantages of the automated trading bot? For one, there is of course an enormous time saving, since the markets and prices do not have to be observed non-stop.
Trading can therefore be done during the day and at night – regardless of whether you are awake or asleep yourself. Another big advantage is the minimization of emotional decisions. To come up with a strategy beforehand is also possible without a trading bot. But it is more difficult to stick to the strategy.
With automated processes, less discipline is needed. On top of that, trends and short-term real-time trades can of course be carried out much better, since automatic decisions are made.
The Disadvantages of the Crypto Trading Bot
But what are the disadvantages of automatic trading with cryptocurrencies? One disadvantage is certainly that the learning effect is lower.
Those who actually deal with the rates, news and markets are much more likely to become professionals than those who rely on automated processes from the very beginning. On the other hand, parameters can of course also be set unfavorably, so that the theoretically non-stop trading can also become a disadvantage.
Finally, there is also the disadvantage that computers are becoming more and more powerful through algorithms, but they are also not faulty. Besides, there are many different trading apps on the market, which also have different qualities.
Conclusion about Autotrading with Crypto Trading Bots
The fact that someone takes over the trading of securities and currencies also existed in the past. However, traders also wanted to be paid accordingly for this. The fees for trading bots for auto trading with apps, on the other hand, are low.
There can be some advantages for users, as markets are monitored around the clock without having to be there. If the parameters are set well, automated profits can also be generated.
However, the customer still decides for himself which conditions should apply to the automated trading processes. In this respect, autotrading is not a sure thing, but it can have enormous advantages. One particular advantage is that emotional decisions, which can arise at short notice, are eliminated.
Therefore, there is nothing against algorithmic trading strategies, as they have been used in cryptocurrencies and in numerous other markets for a long time. The strategies can eliminate human errors and produce very good trading results.
Although, these results are never guaranteed and never without risk. Those looking for reputable, promising Bitcoin bots will rarely find them at providers with lurid advertisements. Pictures and quotes from celebrities, enthusiastic testimonials – all this turns out to be pure advertising gimmick on closer inspection.