- Trading bots are automated programs that help traders execute trades on cryptocurrency exchanges
- Statistics indicate that only 5 per cent of total trades are profitable
- Trading bots have gained popularity in the crypto world because of the volatility of cryptocurrency markets and the potential for profit
Crypto trading bots are software programs that monitor market conditions and perform trades. They do this according to preset algorithms, enabling automated and high-frequency trading.
According to statistics, the vast bulk of traders lose money. The 95% figure, which Tradeciety popularized in connection to traditional assets, is also applicable to cryptocurrency trading. This indicates that only about 5% of trades are profitable. One of the primary reasons traders lose money is poor emotional management. The high level of market instability makes it worse in crypto dealings.
It can be difficult for traders to control their emotions when making trading choices. Three common emotional reactions that can result in impulsive and irrational trading behaviour are the fear of missing out, worry over losing money, and the propensity to hold onto losing positions.
There are many strategies for reducing the effect of emotions on trading. One of them is using bots. These are specialized pieces of software that are used in automated crypto dealing. The cryptocurrency market is actually dominated by automated trading, with many bots serving as intermediaries on both centralized and decentralized exchanges. While many newcomers have misgivings about bots and may connect them with scams (DEXs).
Getting the most out of trading bots
For decades, traditional financial markets have used automated trading methods. According to Deutsche Bank, 90% of equity-futures transactions and 80% of cash-equity trades are executed by algorithms with no human intervention. Bots are also becoming increasingly popular in the cryptocurrency industry.
Some trading bots go even further by incorporating cryptocurrency buying signals. Crypto trading signals, for those who are unfamiliar, are alerts or recommendations. The alerts indicate when to purchase or trade a specific digital asset. The goal of crypto trading signals is to assist individual investors in making educated decisions. The decisions are typically based on technical analysis indicators. However, the signals may include information on a trade’s entry and exit points, stop-loss orders, and other pertinent data to direct the investor’s actions.
Bots can enhance their performance and accuracy by incorporating trading signals. TradingView, a top technical analysis tool for all types of assets, including cryptocurrency, is one of the best resources for custom signals. Advanced users can use the platform to build custom indicators and signals, which can then be integrated by bots.
TradeSanta smart bot is one of the automated trading options that incorporate TradingView signals. While configuring a bot, users can use TradingView signals to start or close transactions.
Users can immediately create crypto bots by connecting their existing crypto exchange accounts with API keys. It works with all main exchanges, including Binance, Kraken, Bybit, Coinbase, OKX, Huobi, and HitBTC. This means that traders can use their bot tactics with hundreds of coins, including Ethereum, Dogecoin, Bitcoin, Cardano, and Solana.
How do bots help traders in Crypto trading
Traders can program bots to watch the market and place trades based on their chosen strategy and custom signals. They avoid the need to continuously monitor the market in this manner. More significantly, they remove the negative influence of emotions. Trading bots, unlike humans, do not have feelings and do not make decisions based on fear, greed, or anxiety. Instead, they base their choices on statistical analysis and predefined rules.
One significant benefit of trading bots is their ability to operate 24 hours a day, seven days a week, which is particularly important for cryptocurrency trading because the cryptocurrency market is open 24 hours a day, seven days a week. While traders must take breaks and relax, bots can monitor the market and execute trades based on predetermined rules. This feature guarantees that bots can capitalize on profitable opportunities as soon as they arise.
Furthermore, trading bots can rapidly analyze large amounts of data. They can monitor multiple markets at the same time and trade based on multiple indicators, enabling them to make well-informed choices free of emotion.
Some traders think that automated market trading is only for experienced traders who understand the nuances of cryptocurrencies and exchanges. However, this is not always the case. Beginners with a rudimentary understanding of market orders and technical analysis indicators can begin with vetted crypto trading bots to reduce the effect of emotions and increase potential profits.
Automated crypto trading may be a good place to start, particularly for those who have prior experience trading conventional assets such as stocks, currency pairs, and commodities.
Trading bots have the ability to analyze massive amounts of market data and perform trades in seconds, giving them a degree of efficiency and accuracy that manual trading cannot equal.