Advantages Of Automated Crypto Trading
Automated trading on the crypto market is executed by a trading software or robot, which is based on a specific trading strategy. The trading strategies consist of a set of mathematical and statistic rules, applied to the changes in price and volume of currency pairs, and are usually based on technical analysis. Automated trading robots enter trade orders on behalf of the trader. It allows users to establish more efficient trading without having to keep on top of the market at all times.
The algorithm monitors the markets to find buy or sell opportunities based on the trading strategy. Depending on the specific rules, as soon as a trade is entered, any orders for protective stop losses, trailing stops and profit targets will automatically be generated. In fast moving markets, this instantaneous order entry can mean the difference between a small loss and a catastrophic loss in the event the trade moves against the trader. There is a list of advantages to having a computer monitor the markets for trading opportunities and execute the trades. Some of the advantages are listed below:
- Minimize Emotions. Automated trading systems minimize emotions throughout the trading process. Since trade orders are executed automatically once the trade rules have been met, traders will not be able to hesitate or question the trade.
- Ability to Backtest. Backtesting applies trading rules to historical market data to determine the viability of the idea. Careful backtesting allows to evaluate and finetune a trading idea, and to determine the system’s expectancy — the average amount that a trader can expect to win (or lose) per unit of risk.
- Preserve Discipline — Because the trade rules are established and trade execution is performed automatically, discipline is preserved even in volatile markets.
- Achieve Consistency. One of the biggest challenges in trading is to plan the trade and trade the plan. Even if a trading plan has the potential to be profitable, traders who ignore the rules are altering any expectancy the system would have had.
- Improved Order Entry Speed. Since computers respond immediately to changing market conditions, automated systems are able to generate orders as soon as trade criteria are met. Getting in or out of a trade a few seconds earlier can make a big difference in the trade’s outcome. As soon as a position is entered, all other orders are automatically generated, including protective stop losses and profit targets.
- 24X7 Market — as Crypto market is open 24X7 it is almost humanly impossible to trade every entry signal round the clock manually.
In order to participate in the market, you can either trade yourself or use an automated trading solution. Both are actually viable and if you can actually perform both, you are maximizing your potential profits as well.