Automated trading strategies: the benefits of the bot
Users who sign up on Quadency and integrate with AAX before October 31, 2020, are eligible to receive up to $100 USD in rewards. (learn more here).
Visit Quadency and open your account here.
AAX has partnered with Quadency, offering traders a growing library of automated strategies to unlock the maximum crypto trading potential with the most ease.
In the last few years, trading bots have become increasingly popular with crypto traders of all different skill levels. Investors are always looking for better ways to generate profits and beat the markets, and with crypto trading automation that becomes easier to achieve for everyone.
But like with everything related to crypto trading, there is no silver bullet or magic solution. Using bots to execute automated crypto strategies still requires you to do your homework and stay on top of market developments. Bots are tools. They can be productive or destructive — it all depends on the trader wielding their power.
What are automated strategies?
Automated trading strategies can range from the overly simple like buying a fixed amount of assets at regular intervals, or incredibly complex based on multiple dynamic technical indicators. In the simplest terms, automated trading strategies follow a set of rules to make trades on our behalf. It can help traders take favorable positions without requiring active involvement (crypto markets are open 24/7, but you might need to sleep sometimes), plus it takes emotional decision-making out of the equation.
While you could technically create your own bots to follow a specific trading strategy developed by you, the partnership with Quadency makes it easier to work with trading bots by simply giving you a selection of automated trading strategies to work with.
Examples of Quadency automated trading strategies
Once you connect your AAX account to Quadency using secured API keys, you are able to build on the menu of bots available on Quadency. For any of these strategies, you can tweak parameters to match your trading style and risk appetite, plus for some bots you can run backtests before going live.
Popular automated trading strategies available through Quadency include:
Portfolio Rebalancer
Use this bot to automatically build a diverse portfolio by selecting desired assets and setting their respective allocations. Portfolio will be rebalanced at the defined interval when assets gain or drop in value by given threshold. This bot can also be used to quickly liquidate multiple assets into a single asset like BTC for example.
Grid Trader
This bot automates the popular “grid trading” strategy which seeks to profit from volatility of the market by placing multiple buy and sell limit orders on grid lines around the current price. As the price moves up and down within the grid, filled orders are automatically replaced with the appropriate buy or sell orders to continue trading.
Market Maker
Use this bot to execute a real-time market-making strategy. The bot will attempt to buy low and sell high by placing 2 simultaneous limits orders on both sides of the order book. When both orders are filled, or stop-loss is triggered the process repeats and 2 new orders are automatically placed.
MACD
This is a MACD indicator based trading strategy. A buy signal occurs when the MACD line crosses above the signal line, and sell signal when MACD line crosses below the signal line.
Mean Reversion
This is a simple RSI based strategy which buys an asset if the price is below the “oversold” RSI level, and sells when the price is above the “overbought” level.
The benefits of automated trading strategies
Unlike the traditional stock market, crypto markets are open every single hour of every single day. Using bots helps you to capitalize opportunities without requiring you spend every waking hour following market movements.
Automating trades by using bots also removes emotion from the equation, which can both help you seize opportunities by lowering hesitation as well as protect you from yourself during times when you take disproportionate risks outside of your original trading strategy. A trading bot does not try to make up for losses by taking bigger risks. It always stays on course, no matter what.
Lastly, using bots also helps you eliminate the need to conduct repetitive and time-consuming tasks — achieving the same in much less time. For example, if you’re using the Grid Trading strategy to take advantage of market volatility, calculating the price of a new limit order and placing it manually takes much longer than the time it takes a trading bot to do the same. And it can do it over, and over, and over again on the same day, without getting tired or bored.
Note that following a particular strategy without fail, does not translate to consistent profit-making. The same risks that come with trading crypto still apply as always, the only difference is that executing the strategy is much more efficient and consistent.
Different automation tools can each help you take advantage of different market conditions and trends. Quadency currently offers two main categories of bots: those based on popular technical indicators, and others based on popular trading strategies. There’s a crypto trading bot for every situation and the possibilities are endless. And if you don’t see the right trading bot for you, then you can create your very own using the Strategy Coder available on the Quadency Platform.
Users who sign up on Quadency and integrate with AAX before October 31, 2020, are eligible to receive up to $100 USD in rewards. (learn more here).
Visit Quadency and open your account here.
Originally published at https://academy.aax.com on October 6, 2020.
