With the increasing popularity of cryptocurrency there is a gradual rise of investors in this field. Trading bots are applications designed to manage trading in crypto easily.
Introduction: Cryptocurrency was conceived as a peer-to-peer currency system that would make transactions easier. It would do so through the blockchain technology that would improve the existing ledger system in the traditional banking system, where a decentralized system of managing transactions would yield high productivity by making the system highly time-efficient.
Bitcoin made it to the news after its bull run in the year 2017, where the value of a single Bitcoin rose exponentially from 5000 USD to 20000 USD over three months. Since then several new cryptocurrencies have come up in the market and offer improvisation on previous crypto technologies.
However it is difficult to find the right currency to invest in. As we are aware, the cryptocurrency market trends are constantly changing. The fluctuation of prices is quite high. One has to constantly update oneself on the changing market trend to make the right trading decisions that would incur a minimal loss.
This is where the revolutionary trading bot application figures in. With algorithms that are designed to constantly scan the market for certain convenient markers, these automated trading bots are highly efficient. With the right trading bot application at one’s disposal one does not have to constantly keep an eye on the market trends to make a purchase or selling decision.
However trading bot is still a new technology, and one needs to be aware of its functionality before one can decide which application to choose. To know more about the revolutionary trading bot technologies, read on!
How do trading bot applications function?
Each trading bot application comes with a set of algorithms that can scan for certain parameters or market trends. The investor must choose the right trading bot application that would be able to work according to a predefined trading strategy. These apps are automated in the sense when they detect the appropriate parameters they make a purchase or sell decision-based on the investor’s strategy.
Mostly, each trading bot application is designed to perform under a specific kind of market condition. The investor can make a substantial gain based on the strategy that they want to be implemented. Although these apps are designed to increase the gain probability based on the market prediction formula, the gain is something that cannot be guaranteed. Every market trend at any specific point in a given time has multiple possibilities. Therefore one must choose the right application whose functionality would be in sync with the possibility the investor wants to explore. If the trading bot application is not performing according to your devised strategy you can always turn it off and shift to manual trading. You can also take the reference from the advfn.com to clarify your doubt as per your requirements.
Various trends of trading strategies
There are multiple trading strategies that these bots can implement. Here are some examples of trading strategies.
- Trend Strategies- in this strategy it is required to follow moving average trends, channel breakouts, movement of the price level, etc.
- Strategies based on mathematical models- In this model, a combination of options is allowed to trade on. Placement of trades happens to offset negative and positive delta points.
- Rebalancing of Index Funds- Here trade options are availed based on an algorithm to detect appropriate prices in real-time.
- Arbitrage- This algorithm aims to detect price differentials before executing a trade function that would derive maximum profit.
- Mean reversion- This requires the algorithm to identify predefined price ranges to execute the right trade option automatically when the price of the cryptocurrency falls in or out of that range.
Conclusion: There are numerous trading bot applications available for trading in cryptocurrencies. You must conduct basic research on the methodologies and functionality provided by various applications from various companies. From free open source software to the paid version of trading bots used professionally, choose the one that is in sync with your investing strategy.