Introduction: Elon Musk, the much-acclaimed CEO of Tesla has invested 1.5 billion USD on Bitcoin- the first cryptocurrency. Bitcoin and later other cryptocurrencies aimed to introduce a peer-to-peer-based exchange system. It works as an alternative to the generic currency system and the traditional banking process. The reason it is all rage is that it has improved upon the existing banking system, and can carry out transactions in a much shorter time.
How exactly is cryptocurrency more efficient? A cryptocurrency such as Bitcoin uses a blockchain database system that stores transaction details as memory blocks linked to other memory blocks. With a future transaction, the chain gets longer. It is decentralized as it is not controlled by a banking system or any governing body, and is universally acceptable. While transactions across borders usually take a couple of days, in the cryptocurrency network it is possible to complete such transactions in a few minutes! Most importantly it is much secure as every unit of this digital currency has its blockchain history, where every trading information is stored. Any mistake in this new blockchain ledger system is virtually impossible since the record always refers to its transaction history during the computation of a crypto transaction. For more information you can visit here knowtechie.com
It is for this reason several banks and multinational corporates across the world have already made huge investments in various cryptocurrencies. A great number of new cryptocurrencies have come into the market that promises improvement on previous systems. Ethereum, Algorand, Litecoin, Bancor, Binance Coin- to name a few. For a new investor who wants to invest in crypto, it is important to be updated with constantly changing market trends. This is where trading bots come in.
There are numerous revolutionary site and applications that offer automatic trading services- commonly known as the trading bots. How do these applications help an investor? Let us find out.
How do Trading bots’ function?
The trading bot applications come equipped with algorithms that can detect specified market trends and parameters. According to the investors’ trading strategy, these bots detect the right parameter that would help the implementation of the said strategy to ensure a high probability of the desired result. These bots are automated. Once they detect a defined market trend from all existing trends, they automatically make a trading decision on behalf of the investors. Thus, the bots will make a purchase or sell assets in real-time. The investor would not have to constantly update themselves on the unpredictable trends in the crypto market.
In most cases, the trading bots are made to function under specific market conditions. The trader can make the best out of their investment by devising the right strategy, which would be implemented by these trading bots. However, although the risk of loss is said to be minimized substantially by automated applications, no trading bot can guarantee success on every trading choice.
From a range of open-source applications to paid applications that offer these automated services, it is important to choose the software that would work best for a specific trading strategy. Each application has its functionality and works only to achieve certain conditions. Therefore, if you plan on using a trading app, conduct basic research on the methodology and the kind of service the app provides so that you can choose an application that works the best for you. If you do not find a useful application, you have the option to switch to manual trading anytime you want.
Advantages of using trading bots
There are several advantages of suing trading bots to increase your chances of gain.
- The timing accuracy in making the right trading choice.
- Algorithms are more reliable than manual observation when it comes to dealing with an online system.
- The risk factor that comes with manual trading is substantially lowered.
- Data trading takes place in real-time.
- The algorithm automatically scans for a specific market trend among all existing market trends.
- The trader is not required to constantly update themselves with live price changes and constantly fluctuating graphs.
- Algorithms can accurately and instantly detect the best trading opportunity and execute trade functions accordingly.
Conclusion: You must weigh out all the advantages and the possible disadvantages before you try out a trading bot for cryptocurrency exchanges.