Asset Management With Bots — The Future Of Crypto Investments Is Here
The legacy financial world is going through a tidal wave where you either find a way or fade away. Today, asset management is more efficient with bots. And cryptocurrencies are leading the way.
It means that trading and investments will be entirely handled by bots very soon, leaving humans to focus on strategy and relationships.
The growing presence of bots in asset management is gradually revolutionizing the sector. Cryptocurrencies are highly volatile, so the industry represents a great opportunity to push the technology of trading bots. Lowering the entry barriers, today these tools are also available to the average investor.
Trade better with a bot
By running bots, you can deeply analyze broader data sets with little human supervision. That is just one of the many ways through which technology makes our lives easier. The setup of your investment strategy can be as complex as you need, as the bot’s algorithm can process advanced computations quickly, allowing you to catch all possible opportunities.
On top of that, crypto markets trade 24/7, so a bot can take action based on signals at any time. That is a significant edge over manual investing, which requires a constant market analysis.
A prompt reaction to market moves can make the difference between a profit or a loss. Also, it is a global market where time differences can affect the market. Both of these factors limit the efficiency of human crypto trading.
What are bots?
Crypto bots can quickly gather consistent analysis and interpret market statistics. Furthermore, bots can collect and analyze market data, calculate potential risks and execute buying and selling decisions based on settings.
Trading with bots is like hiring a crypto expert to do trading for you with a set of instructions. It allows you to reduce the time to manage your assets significantly. Periodically, you can review the performance of the
bot and adjust the settings to improve the results.
Asset management with bots for your crypto assets
Countless different types of bots can add value to your assets. Depending on your needs, preferences, and time horizon of the investment, you will find the one that works better for you.
Smart Accumulation
Gaining exposure to a new asset class should be gradual. Timing the market is challenging, so the chances to spot the very best time for buying are realistically low.
A bot can help you investing periodically, optimizing the execution to help you maximize the returns. Distributing your buy orders across a more extended period gives you the possibility of buying at a better price, lowering your average purchase cost. This strategy is called Dollar-cost averaging (DCA).
By using advanced indicators, the bot can improve the average purchase cost, adding value long-term.
Rebalancing Strategies
Diversification is an excellent tool for investors. On the other side, that means managing a portfolio holding many assets that would require a lot of time to track their price move every day.
Cryptocurrency’s volatility offers many opportunities that a bot can easily exploit. How often are you tempted to take some profits on your positions? You may have often refrained from doing it because it would have involved managing the trade to sell and monitoring how the price moves to buy it back.
A bot probably expresses the best of its benefit by passively managing your assets according to pre-set instructions. The automated trading system can rebalance the wallet based on multiple variables. Portfolio weights, volatility, correlations, price indicators, only to mention the most common.
Coinrule offers an intuitive yet efficient way to rebalance your assets periodically, adding value to the wallet, compared to a buy-and-hold strategy.
Active day trading
Being a day trader is the dream of every investor. The idea of having flexible work that can yield high daily returns is indeed compelling. Only professionals day traders know the genuine efforts needed to establish such a career.
A bot can help you with that. You may not be just ready to quit your job from day one, but you can set aside an attractive profit. The real challenge is to execute promptly trades based on complex signals and manage your position in cold blood, sticking to the original plan so that emotions don’t interfere with your trading system.
The bot has no feeling by definition, so it’s the perfect candidate to run your strategies. You may need to fine-tune the setup of the bot to fit your needs perfectly. Once that’s done, all you have to do is periodically assess the bot’s performances and do adjustments or optimizations eventually.
You can find a broad selection of active day trading bots here.
Risk-management
Risk management strategies such as an automated portfolio stop-loss protect your capital from the time of excessive market volatility. You can use strategies like this to cut your losses quickly and avoid getting stuck in a losing position for long.
An automated trading system can also re-buy your coins lower using less of your capital or acquire more coins using the same amount of capital. This way, managing a broadly diversified portfolio of assets becomes significantly easier.
In the same way, taking profit is another form of risk management. It allows you to de-risk your potentially overbought positions and invest in other opportunities where there could be more upside potential. It is beneficial to sell on days where your coins have increased substantially and re-buy on the retrace.
The crypto market drop in May 2021 proved the importance of taking profit gradually in times of market euphoria. Again, the average trader usually lags in taking action, constrained by his emotions, while a bot will reduce the exposure as the positions reach the pre-set profit target.
The future of Asset Management
The new era of asset management with bots is opening up to a new concept of diversification, from the diversification of your assets to a broad diversification of your trading strategies.
The most prominent players are already investing heavily in trading bots and machine learning. The many benefits of bots can create long-term and short-term strategies and add value to your assets.
While there are many benefits of using bots in asset management, it isn’t without its downsides. However, it is up to each trader to weigh the pros and cons before deciding. Although the idea of simply sitting back and have the bot work may be tempting, that is not how it works.
The next step for the industry is to fully embrace AI and machine learning to reduce the manual intervention and leverage more on the potentials of big-data analysis.
The future of asset management with both is definitely bright!
What is Coinrule
Coinrule allows you to create trading rules that run automatically across your favourite exchanges.
With Coinrule you can easily develop your own trading rules and strategies and set them up to run automatically. It is the “if-this-then-that” for cryptocurrency trading that allows you to plan your crypto trading rather than having to sit for hours in front of charts. Best of all? No coding skills are required, meaning anyone can use Coinrule.
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DISCLAIMER
I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. All information contained in my post should be independently verified and confirmed. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware of the risks involved with trading cryptocurrencies.
