The crypto market is growing very fast and has already gained much attention. And, you know, even PayPal has also adopted crypto while enabling its users to buy or sell crypto assets. And, behind this popularity, this industry is facing some challenges too. It requires a lot of time, attention, and experience to succeed in crypto trading.
If you have ever traded crypto, you must know how volatile this market is, and how quickly market conditions can change. Right! Spend your weekend offline without watching the market trends, and there are chances that you’ve lost a quarter or more of your investment when you come back.
Time waits for no one, and crypto markets are no exception. Now, what would you do? Or you want to invest in crypto, but don’t have much time to watch market trends?
And, the answer to above question is, using automated crypto trading via making use of crypto trading bots to buy and sell crypto assets. Now, what is automated crypto trading?
Let’s find out the answer!
Table of Contents
Automated crypto trading
Automated trading is a method of trading in financial markets by using a software or tool that executes preset rules for entering or exiting the trades. Crypto trading is all about market fluctuations. With an automated crypto trading system or method, you can trade crypto assets conveniently. The system will trade on your behalf while ensuring instant results.
Automated trading systems are also referred to as algorithmic trading or automated trading, allowing traders to establish specific rules or predefined conditions for both trade entries and exits. These software systems/applications are intended to react to market changes and trade at the most favorable moment. The most significant advantage of automated crypto trading or algo trading is that users can execute particular crypto trading transactions on multiple indicators including the target price.
Automated or algorithmic trading uses AI to build and monitor trading signals, send orders, and manage portfolios without any manual involvement. These algorithms use complex online markets and trading platforms to trade similarly to online trading. Algorithmic trading can be a suitable investment option, provided you get a few things right which include proper backtesting validation methods and correct risk management techniques. Automated trading bots analyze the market in a matter of a few minutes.
Automated crypto trading platforms are the automated software that trades on your behalf. To use an automated trading platform, you need to make an account with trading bot along with choosing the right strategy. Growlonix is one of the best automated crypto trading platforms or terminals that helps traders in identifying profitable crypto trading opportunities as well as the best entry or exit points. Additionally, the platform allows traders to mimic the trades made by expert traders via making use of copy trading.
Types of automated trading solutions
There are different ways that traders can consider to automate their trading activities. These include using trading bots, signals and via copy or social trading. Any approach you choose will depend on your skills, experience, and preferences.
In automatic trading, trading software or bots execute trade positions in the market based on a predefined or specified strategy or a rule-based criterion that must be achieved. Some of the typically coded strategies include mean reversion, trend and momentum trading, and arbitrage strategy, etc.
On the other hand, copy trading allows investors to track, follow and copy/mirror the trades of the professional traders or successful investors on their personal trading accounts. Successful social trading requires robust technologies to ensure that trades are executed in real-time to mirror the ‘successful’ trader perfectly.
Apart from this, trading signals is another type of automated trading system used by the traders. A trade signal is a trigger to buy or sell an asset based on concrete analysis. This analysis could be human-generated using technical indicators or using mathematical algorithms based on market actions in combination with some financial indicators.
Most of the trading platforms offering copy trading features are fully automated, but others allow investors to choose which trades or signals to execute in their trading accounts.
How does automated trading work?
Normally, if you want to trade crypto assets, you will do it on your own. It’s a manual process where you select a crypto asset to trade, build a trading plan, and then manage the trades on your own. But with automated trading, you can earn profits without watching the market.
Automated crypto trading relies on algorithms which are set of instructions used to solve computational issues. In crypto sphere, algorithms can trade digital assets on behalf of the traders. And, the programs which use algorithms to trade are crypto trading bots.
Growlonix offers a variety of bots to the traders which works based on preset conditions, signals, market analysis, and more. Trading bots use APIs that help traders to interact with the exchanges.
In general, automated crypto trading goes through four steps including data analysis, signal generation, risk allocation and execution. Let’s understand about these:
- Data analysis: In crypto trading sphere, data is an essential ingredient for success, and that’s why a crypto trading bot needs data analysis.
- Signal generation: Once the data analysis is done, a bot performs the trader’s work by predicting current market trends and identifying possible trades based on market data and different technical analysis indicators.
- Risk allocation: This is where the bot determines how to distribute the risk among different investments based on predetermined parameters set forth by the trader. These preset conditions usually define how and what percentage of funds will be invested when trading.
- Execution: The process in which cryptocurrencies are traded in response to the signals generated by the pre-activated trading system is known as an execution. Here at this step, the signals will generate buy or sell orders that are passed on to the exchange via its API.
Do I really need a crypto trading bot?
The first thing you’ll need to do is choose the right automated trading platform you are going to trade on. Set up an account, and make some small investments. Once you are ready, choose the crypto trading bot. Growlonix offers a variety of trading bots to the traders that will make their transactions automatically.
Let’s find the answer to the above question now whether you need trading bot or not!
Well, this depends on whether you are comfortable with its strategy. Know about different types of bots and understand how they make decisions until you find the one meeting your expectations or goals. Another thing to keep in mind is that even the best bot doesn’t provide any guarantees.
Growlonix is one of the best automated crypto trading platforms or terminals that manage your entire crypto trading portfolio in one place. You can link all of the exchanges you use, your wallets, and manage your money without bouncing around the internet. It is an advanced crypto trading terminal built for professionals. Currently, the platform supports all the major crypto exchanges like Binance, Binance Futures, Coinex, Kraken, Bitstamp, Polenix, KuCoin, HitBTC, BitMEX, Bittrex, and more. The platform offers trading bots as well as copy trading features to automate the trades.
Are bots the future of crypto trading?
There is no answer to this question if bots are going to revolutionize the crypto trading world or not. However, the bots may improve the trader’s trading efficiency. Let’s understand how bots are changing the crypto trading world:
Unlike humans, bots don’t need to sleep. You can depend on the bots 24×7.
Bots are perfect for backtesting trading strategies by using historic data to create simulations that test the viability of any particular strategy.
Trading bots are great at minimizing the risks. You can run multiple trading bots to diversify your risks.
Bots are quite faster than humans at initiating trades. They can perform millions of computations across several markets instantly.
Overall, bots are changing the cryptocurrency trading sphere by providing an efficient and transparent platform for investors to thrive in today’s market conditions.
Different kinds of bots offered by Growlonix
There are different types of trading bots offered by the trading platforms, but the most popular ones are grid trading bots and arbitrage bots.
As the name suggests, grid trading bots focus on buying low and selling high by using market volatility to their advantage. Binance trading bot also works on this trading strategy. These bots let traders place strategic buy and sell orders within the set price range to earn profits.
Once a sell order is executed, the bot will place a buy order at a lower grid. On the other side, arbitrage bots involve capitalizing on the changes in the market price between the same assets on two different exchanges. This kind of bot is perfect to make smaller yet consistent profits.
Before you get started with automated crypto trading, it’s essential to understand which bot is right for you. So choose them wisely and earn profits. Growlonix offers different types of bots like copy trading bot, BitMEX trading bot, signal trading bots, and much more along with some advanced strategies.
Nothing is certain in the crypto trading sphere, and there is no guarantee that using a bot will pay off or not. However, these bots are designed to make the best buying or selling decisions. So, automated crypto trading is a phenomenal method of honing your trading skills and making money while you sleep.