Trading With Bots In The Crypto Market

The use of trading robots is a fairly common activity, especially among people who are just starting out and who want results automatically. Instead of investing time in acquiring knowledge and experience through the study of the news and technical analysis , it is quite common to opt for systems that allow trading with bots so that a program makes the investment decisions for you.
The use of this type of program, in general, does not usually offer good results. The reason is simple on the one hand, but on the other it requires a detailed explanation. We are going to talk about this whole topic in this article. In this way we hope that before operating with bots you know their risks and benefits.

Trading with bots in the cryptocurrency market

If trading with bots has a series of notable drawbacks in any market, in the case of cryptocurrencies it becomes even more risky. Below we discuss the main problems you may encounter when trading with bots becomes your normal trading activity.

program cost

Programs that allow trading with bots within the cryptocurrency market or any other market are not free. The cost of this type of software is also usually quite high.

This means that from the outset we will be assuming a loss, which a priori seems like an investment. The truth is that in practice this produces a feeling of negative position that generates greater anxiety when looking for benefits.

Wanting to make money fast is the main reason why users lose money in the markets. In the world of cryptocurrencies, patience is a fundamental virtue. Before you buy any software to help you trade, think about how much cryptocurrency you can buy for that price.

Use of indicators

Trading with bots means that you leave investment decision making to a program. The most normal thing is that certain parameters can be configured, but trading decisions are automatic following a certain strategy. That is the ultimate goal of any bot intended to operate in the markets.

To make investment decisions for you, it makes use of indicators. Indicators are different kinds of information provided by the chart and the trading tools linked to it.

This type of information, as is logical, is displayed once a certain event has already occurred. It can be the close of a candle, a moving average crossover, or a combination of different factors.

Once a certain circumstance occurs, the investment decision is made , but when trading with bots, it occurs automatically. This, from the outset, has two huge problems:

Other factors are not taken into account

Apart from those that appear in the protocol of operation of the program. The signs can be confusing. Sometimes a signal can be clear and other times not worth taking a position.

Human decision plays a fundamental role in this regard.

All signals trail the price movement

Unlike when a pattern is identified on the chart, a method by which it is intended to take a position in anticipation of the possible movement of the market, the signals taken by the bots follow the indicators and therefore parameters already met.

In a simplified way, it can be said that trading with bots often causes positions or decisions to be made too late, once the movement has already occurred.

high volatility

The volatility of cryptocurrencies is also an important aspect to take into account. Trading with bots in this market is even more difficult or dangerous than in traditional markets. The reason is high volatility.

Rapid and very abrupt price movements can easily cause confusing signals when trading with bots. For example, it is possible that a candle closes giving a positive signal and when taking the position the market does something unexpected.

If the market has a very erratic behavior, that does not respect the parameters well and that it moves without a clear trend, it is possible that we liquidate a good part of the capital without being able to control it, simply entering and exiting the market taking fast positions and continuously assuming small ones. losses.

loss of principal

If, as a general rule, margin trading is only suitable for expert traders, it is even less advisable to operate in this way using bots.

Leverage can liquidate the position in one quick move. This situation is very frustrating and can lead to a tremendous loss-making exit from the market.

The cryptocurrency market has a continuous upward trend over time (in the long term), so profitability can be obtained simply by storing some of the best projects . If you use bots to make quick money and end up losing it, it will be very frustrating to see how the price goes up and you do not have crypto in your possession. Ask yourself if it's worth the risk.

In which cases is it advisable to operate with bots?

If at all times we have given a somewhat negative view of the use of bots, it is because we believe that in order for a person to really generate profits in the market, they have to train themselves.

The use of programs will always be seen as a simple and quick access to the possibility of making profits, but without prior knowledge it will be impossible to know if the strategy is appropriate for your needs and if it can be effective.

In other words, even to operate automatically it is necessary to know about the operation and analysis of the markets.

Therefore, it would only be advisable to operate with bots if they are fully configurable and your own strategy can be integrated into them. For example, for people who already have a clear operating method and want to automate it so that it doesn't take time and they can focus on other things.

In any case, it will always be important that you are aware of the operations, the best way in which bots work is as an aid and not as a substitute for the human factor.

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