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LINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOW:
Definition of Trading Bots: https://www.investopedia.com/tech/whats-role-bots-crypto-trading/
Risks associated with Trading Bots: https://bravenewcoin.com/insights/cryptocurrency-trading-bots
If you do a simple duck duck go search for bots in crypto, you’ll find an endless list of trading bots you can buy in the hopes of upgrading your trading game. But before you get carried away and you get your hopes up that you’ve finally found the answer to your investment woes, here’s what you should know first before making that decision.
What are bots:
In terms of trading, bots are tools that people can use to execute trades automatically based either on historical price data or on the specific signals like price points and trading volumes. Keep in mind that these parameters are ultimately determined by the person using the bot.
Trading bots can be alluring because cryptocurrencies are traded worldwide, 24/7 and they can have some wild price swings that happen within minutes. Human beings need rest, bots don’t. Many people want to use trading bots to better capitalize on these swift price movements.
Things to know before you start thinking that trading bots are your saving grace:
* They cost money -even the “free” ones.
* Unless you built it yourself, or you know how to analyze the code behind one, you will be left trusting that whoever designed the trading bot took care of any buggy code.
* If you are using the trading bot to copy the trading strategy of another “professional” or “successful” trader, you are relying on them for your own success. If the market doesn’t move in a way that matches the “professional’s” strategy, will you be able to make the necessary changes to address it without taking on a big loss?
If you are brand new to cryptocurrencies and trading altogether, if you’re thinking you can use a trading bot to easily earn a guaranteed percentage of profit, think again.
* The trade offs:
* You will be spending either money or time.
* You will either spend a lot of money in buying the bot, or the fees associated with it, or you will spend a lot of time learning how to understand trading signals and historical price data. In the case of the latter, you will probably be better off designing your own bot or just using your own knowledge accrued during this time to make successful trades on your own.
Bottom line is this, you’ll still need to have a solid investing strategy to maximize your success trading, with or without a bot. If you’re aware of all of these issues, and you’re still interested in trying them out, feel free to leave a comment down below here and let us know how it goes and what you learn along the way.
I will be going into this subject in a much more in-depth manor in an upcoming interview with Wesley Pryor of Liquid Solutions Malta. We’ll be focusing on topics like this in addition to how cryptocurrency exchanges use bots, how to spot a scammy exchange, how decentralized exchanges can improve, and a lot more so don’t miss it!