Bitcoin automated trading systems have become popular because more and more people have less time to monitor trades manually, yet, people keep asking if these robots actually work.
Since the rise of digital currencies, several income-generating roles have risen from cryptocurrencies. One of such is cryptocurrency trading, of which the most popular is bitcoin trading. Bitcoin trading is a lucrative but precarious process whereby traders buy and sell coins within the slim margins of rising and falling of the price of bitcoins.
Although this is inherently a risky endeavor, trading platforms can reduce the risk of undertaking such endeavors by taking the emotions out of the process and automating the process of trading cryptocurrency coins. This article will share everything you need to know before choosing to automate your transactions with these trading systems.
What is an automated trading system?
Automated trading is simply a program that helps you to take the emotion out of your trading decisions. One of the most popular is which is an application that uses pre-set rules for entering and exiting trades. Of course, you are not completely exempt from the process. You will specify certain conditions for your trades, but ultimately, the decision on whether to trade or not will be up to the system.
This process is also known as mechanical trading systems, algorithmic trading, automated trading, or system trading. It is so widely used that several platforms report that almost 80% of their trades are done using automated trading systems.
One significant bonus of these systems (and perhaps one reason why they are so popular) is that they take emotions out of the process, judging the merit of a trade purely by logic and the available numbers. This, of course, does not eliminate risk completely, but it lessens it to a point.
The bitcoin fear and greed index is one of the major determinants of cryptocurrency prices and is determined by how human emotions affect crypto prices. Trading platforms help traders to avoid huge losses by sidestepping these pitfalls.
Related article: How to open a bitcoin trading account and start trading today.
The trade exit and entry rules are usually based on simple criteria like a moving average crossover, or they can be more complicated than that. They may also involve knowledge from an experienced programmer.
The trading platforms use software linked to a direct access broker, and any trading rules must be written in its chosen language.
Pros of using an automated trading system
As mentioned earlier, almost 80% of all trades come from traders; there must be a reason for that, and there are — several, in fact. The advantages of automating your trading are enormous, chief of them being its ability to take emotions out of your investments.
We go into these in more detail below:
- Less time consumption: Trading systems help you to free up your time so that while the system executes your trade, you can spend your time doing other things.
- More discipline: Emotions negatively influence the trading platform and cause investors to lose money. With a trading platform, the volatility that this causes can be significantly reduced. Additionally, human errors like mistakenly entered numbers will not occur.
- Taking emotions out of trading decisions: This is one of the most advantageous aspects of trading platforms. It also ensures that there is a little less volatility in the crypto market.
- Ability to diversify trading investments: With automated systems, traders can conduct several trades while setting a hedge to protect against losses. Where humans would need considerable time to do this, computers can complete this in only a few seconds.
Cons of using an automated trading system
Just as there are several advantages of automating your trading system, there are also some downsides that you need to consider before using this system. Many of these are manageable, but unfortunately, some of them are just not manageable and will have to be dealt with as they occur. This is one of the risks that are inherent in cryptocurrency trading. Some of these cons are:
- Requires constant monitoring: One upside of trading systems is that they give you more time to turn away from trading and focus on other things. However, you still need to monitor your system as the platform runs because there might be some mechanical mishaps — noticing them earlier can help you avoid huge losses.
- The trading system can perform poorly: Yes, trading systems take emotion out of the process, thereby making more sound decisions, but they can still make the wrong call as several things affect the price of cryptocurrencies. This is one of the factors to take into consideration when choosing trading systems. However, because these systems reduce the risk of loss and even let you set a loss limit, they cannot be considered a complete write-off.
Best bitcoin automated trading systems
As a bitcoin trader interested in trading platforms, there are several things that you should consider. You must think about the automation process, exactly how much you’re giving up, the fees you’ll be required to pay, and the platform’s legitimacy.
In this article, we will share three trading platforms that you can use for your trading needs. Each of them has a particular area of specialization, so you will need to do your research to find what works best for you.
- Bitcoin evolution – Bitcoin evolution is the perfect platform for those who are new to cryptocurrency trading.
- eToro – eToro is a trading platform that offers users the choice to invest in stocks or cryptocurrencies. It is one of the top trading platforms and has millions of users.
- Forex.com – Forex.com is another popular platform for trading. Unfortunately, Forex.com only deals with forex trading, and those who are only interested in cryptocurrency will have to find an alternative.
Trading systems can be the best solution to your trading problems as they can help you save time and potentially help you make more money while trading in cryptocurrencies. However, you will need to be careful while using these systems as you can potentially lose a lot of money — trading systems do not eliminate the risk of losing your money; they merely reduce the risk.
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