Automated Cryptocurrency Trading for Beginners
You will have to constantly observe your computer when you trade cryptocurrency. But you can avoid this if you try automated cryptocurrency. This method uses algorithms to help you buy and sell cryptocurrencies and non-fungible tokens for you. You will have to choose an automated strategy and according to this strategy, the software executes trading for you considering some factors like technical indicators, asset price, and the proportion of value that your portfolio has.
If you are someone who does not get enough time to trade cryptocurrencies and is not interested in the buy-and-hold method, automated cryptocurrency trading can be the ideal option. Numerous automated cryptocurrency trading platforms are available in the market and each of them has its strategies and features.
What is Automated Crypto Trading?
Automated crypto trading makes use of automated software and trades cryptocurrency on behalf of you. You will need an online account along with a trading bot. You can refer to blogs like trading robots 2023 erfahrungen to find the best trading bots that can make buying and selling decisions for you. Then you will have to choose the trading strategy according to your goal. Now your trading platform will do the trading for you according to the software’s parameters.
Most of the platforms that support automated trading are APIs. The safest and most secure automated trading bots use blockchain. Such platforms use blockchain’s smart contracts rather than using an API or website. These smart contracts act as code that can autonomously do financial functions.
When You Should Use a Crypto Trading Bot?
If you find some potential in a strategy and feel that it is capable enough to succeed in the market, it is time for you to take the help of a crypto trading bot. It is not a guarantee for your success in the market, it is just an assistant that executes your strategies on behalf of you. You can take the help of a crypto trading bot if you would like to diversify the crypto holdings by using a good strategic method.
Types of Cryptocurrency trading bots
Cryptocurrency trading bots in the market are mainly divided into two types. They are:
- Crypto trading bot APIs
Crypto trading bot APIs are the most commonly used cryptocurrency trading bots in the market. These trading bots get connected to other crypto exchanges to handle your investments. Crypto trading bot APIs can be the ideal option for you if you already own a crypto brokerage account on one of the famous exchanges.
- Decentralized crypto trading platforms
The safest way to use automated crypto trading is by using decentralized crypto trading platforms. They make use of blockchain technology to anonymously trade cryptocurrencies. All your investments will be stored in a smart contract which will be on the blockchain. A portion of the investments in the smart contract will be yours which can be redeemed through the trading platform’s cryptocurrency tokens.
Final Thoughts
As mentioned earlier, the automated crypto trading bot does not guarantee success in the market. Cryptocurrency is a highly volatile currency that is unpredictable. Therefore, technical indicators may not always prove successful. However, some crypto trading bots have good records in beating the market. For trading using technical indicators, trading bots as they save a lot of time and effort.