How automation can help you become a better trader

FinanceFeeds Editorial Team

Crypto traders have the option to use crypto bots. Trading bots are software programs that are created to automate crypto trading. Traders can purchase bots created by other people, by companies, or make their own. Trading bots are used by 20% of crypto traders. That group of traders is also the most successful traders.

Crypto traders have the option to use crypto bots. Trading bots are software programs that are created to automate crypto trading. Traders can purchase bots created by other people, by companies, or make their own. Trading bots are used by 20% of crypto traders. That group of traders is also the most successful traders.

Automation can help inexperienced crypto traders, new crypto traders, and casual traders maintain a more streamlined strategy, produce greater profits, and help them find better trades and trading opportunities. Automation helps crypto traders improve their trading performance by doing the following:

  • Providing for an emotionless trading strategy
  • Faster and more efficient trades
  • Backtesting and paper trades that permit traders to test their crypto trading strategies
  • Risk diversification that spreads the risk over multiple trades
  • Consistent disciplined approach to trading regardless of market activity
  •  Access to trading 24/7/365 on all trading platforms and in all time zones

 Let’s look at how automation benefits crypto traders.

Emotionless Approach to Crypto Trading

Crypto traders tend to behave irrationally because they let their emotions affect their trading. It is difficult for traders to maintain a neutral, dispassionate attitude toward the extremely volatile crypto market. When emotions affect traders’ thinking, judgment, and actions, mistakes are made that cause financial losses. Automation keeps trading emotionless and helps prevent rash or poorly thought out decisions.

Faster and More Efficient Trades

Automated trading software permits traders to trade 24 hours a day, 365 days a year. Since trading never stops, traders who are always online to trade have a better chance of finding lucrative trading opportunities than those who trade during specific hours and on specific days. Moreover, the automated programs can compare the market prices of cryptocurrencies across different crypto trading platforms. Plus, they can execute numerous trades within seconds of each other. In a market where prices can dramatically change in seconds, it is an advantage to have a software program that can make the trades, check prices across crypto platforms, and quickly spread risk across multiple crypto trades. Therefore, automation gives crypto traders using it an advantage over those who don’t use it. It also increases their chances of making trades at the most opportune times.

Risk Diversification

 Crypto traders like all other traders must diversify their portfolios to reduce their market risk. They reduce their risk by purchasing different crypto assets and investing in different crypto contracts (e.g., futures, options, CFDs). While crypto investors can make jaw-dropping profits by investing in one or even a few crypto assets, they are better off not allowing the value of their portfolio to depend on limited high-risk assets. Human traders, due to their emotions and experiences, may not be in the proper mindset or have the ability to rationally spread out their crypto investing risk over a diversity of assets with different levels of risk.

Backtesting and Paper Trades

The crypto market is the ultimate test of crypto traders’ ability to make money trading. However, many traders prefer to test their trading strategies on programs that simulate the market during previous periods of time. Yes, it’s true that the past history of a cryptocurrency doesn’t predict its future performance, however, traders prefer to test their trading strategies, develop new ones, and fine-tune existing trading strategies. In theory, if their strategies would have been successful in the past, then they are more likely to be successful in the future. Furthermore, the availability of different simulations and the possibility of testing them using different market indicators makes this method of strategy testing even more attractive during unanticipated social, political, and economic events that affect the crypto market. In short, the traders will know the possible outcome of their strategies in the event of such extreme market events.

Consistent Disciplined Approach to Trading 

For traders to be successful in the volatile crypto market, they must maintain the same rational approach to trading regardless of the performance of the market. Moreover, the traders need to behave the same whether they rack up profits or losses from their crypto trades. Thus, instead of investors having inconsistent approaches to the market at different times until they learn to control their emotions and FOMO, they can use automation to make rational, systematized trading decisions for them. The software programs monitor the crypto market and interface with crypto platforms using their APIs when coded trading conditions for crypto trading exist in the market. In short, crypto traders who exercise a consistent disciplined approach to crypto trading are more likely to be successful than those whose trading is inconsistent and/or undisciplined.

24/7/365 Access to Crypto Markets 

Human crypto traders have limitations. They cannot be awake and online 24 hours a day, 7 days a week, 365 days a year (24/7/365). They must rest, sleep, eat, work, and do other activities. Automated programs, trading bots, that monitor the crypto market 24/7/365 are the best way for human crypto traders to not only make the best trades but to make the timeliest trades. The other advantage to automated programs is that they can monitor multiple crypto platforms across the world at the same time. Although human traders can be overwhelmed by data, fatigue, or lose focus, automated programs do not have these vulnerabilities. While they are not perfect and do require monitoring, they are the best way to trade on a market that never closes.

Summary

Currently, automated crypto trading programs are the best way for crypto traders to access and profit from the crypto market. They remove human fallibility from crypto trading, permit the use of a consistent disciplined approach to the market, reduce investment risk, and permit trading that is faster and more efficient than anything a human crypto trader can do.

There are a bunch of platforms, which give crypto traders access to automated programs that they can customize and use to increase the profitability of their trading. These options are available to all traders, even those without coding knowledge. For optimal trading and profitability, consider automated trading and using it to make you a more successful crypto trader.

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