How To Trade Cryptocurrency Using Automated Programs(Bot)

As an asset class, cryptocurrencies are very volatile. Now, if you want to buy something and keep it, you don't want it to be volatile. Imagine how bad it would hurt to lose 20% of all the money you've worked hard for in one day or even 23% in 15 hours. But volatility is great for someone who trades.

A market maker at an Investment Bank needs to be able to invest at lower prices when the market is in a bad mood and get rid of risk when the market is in a good mood.

If we could use the same ideas to make algorithms and then automate the whole process, that'd be great, wouldn't it? This is exactly what I've been working on for the past 1.5 years, and I'm finally getting close to having something I can share with the world.

What are bots that trade crypto anyway?

Trading bots for cryptocurrencies are computer programs that buy and sell different cryptocurrencies at the right time to make money. That's the end of it. It's important to remember that not every bot makes money. Most of them don't. It's easy to make a bot that works, but it's harder to make one that makes money.

The bots should make money, and that money should be more than what you would have made if you had just bought the same coins and kept them. When I say "risk-adjusted," I mean that your gains are better than the losses you've had while investing. To show this, think about which of the following you would rather have:

● There are no days when the return is less than 1%, so the total return for the year is 250%.

● Returns of 10% on Monday, -5% on Tuesday, +3% on Wednesday, etc., for a total return of 500% over the year.

We hope you went with the first one. The first one makes sense. And when something is always the same, it is much less likely to go wrong. Even if the second example gave you a return of 100% over the year, you should still choose the first example because it gives you a steady return.

The point here is that if you choose between consistent (strong) returns and a rollercoaster ride, you should almost always choose the compatible option, even if the rollercoaster ride may lead to higher returns in the future. You don't just want high returns; you want high returns that are worth the risk.

And this is the main reason why crypto trading bots are so interesting. If we could find a way to get most of the upside of cryptocurrencies without the regular gut punches, this would be a much better investment than what the hodlers are offering.

How do cryptocurrency trading bots operate?

Indicator Generator

This is where we guess what will happen. Some information will go into the signal generator, and a "buy" or "sell" signal will come out the other end. If you see any bots that use "technical indicators," you should probably try not to look at them and slowly move away.

Risk Distribution

This decides how much to buy based on the buy or sell signal. Should we put all of our money into this trade or just a part of it? Should we buy everything at once, or should we spread it out? Now that we know where the price is going and how much we want to buy or sell, we can move on to the part where the trade is made.

Operation

See, if you have a lot to buy at once, like $10,000,000 for 500 clients, you probably don't want to do it all in one trade because you're not likely to get a good price. You should put your order into the market slowly.

If you have the same bot as a thousand other people and you're all running in separate instances (which means your bots don't talk to each other), this will hurt your pricing.

Each of the three parts, signal, risk, and execution, needs its algorithms and ways to improve. If you have a bot that skips over any of these steps or doesn't care about them, it won't help you make money.

What makes a trading bot different from a person?

Longevity. Bots can work all the time, but people need to sleep (and rest).

Speed. Robots work orders of magnitude faster than the time it takes a person to think and act.

Emotionless. Robots don't act out of fear or greed. They will always do what is most likely to help them win.

Capacity. Robots can handle gigabytes of information each second. People can't process that much information in that amount of time.

You see, running bots has many benefits, and it's all because their skills are very different from those of humans. Bots are always the same and never change. To make money, you need to be consistent, and, to be honest, you have to do everything that goes against human nature.

But it's important to remember that any bot can only be as good as the person who made it. The old saying "garbage in, garbage out" is true. People can do better than machines in some ways, mostly by thinking for themselves.

#Disclaimer Note :

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