There is no shortage of crypto trading robots on the market now, and that’s no accident. People are looking for instant gratification and fast results, and automation has taken over in many spheres, which includes crypto trading.
To find out more, we sought out the opinions of investment experts at Invezz. A spokesperson told us:
“Some bitcoin robots use artificial intelligence (AI) to automate crypto trading, others allow advanced users to create a set of rules for the bot to trade by. This is normal in the world of banking for instance, most large banks employ teams of developers to code these kinds of auto trading bots and use a process called ‘backtesting’ to stress test their systems, giving them an edge over retail when trading the markets. Ultimately, they are computer programs that make it possible for traders to increase their chances with less time and effort needed to monitor their portfolios.”
This is why, according to reports, bitcoin robots are getting an increasing number of Google searches. Some bots target experienced traders who want to make more money, while others are designed to help novices learn the ropes.
Crypto traders are searching for bots that require minimal input from them in most cases and want to use bots to trade any cryptocurrency and digital asset in general.
How do you use a bitcoin bot?
Bitcoin bots are developed using programming languages like Python, Java, or C, most commonly Python. They use Application Programming Interfaces (APIs) to execute trades on and interact with different crypto exchanges.
Crypto trading bots process exchange data, generate trading signals, assess risk, and perform trades on your behalf. This goes for sell or buy trades and is repeated with every interaction between an exchange and a crypto trading bot.
Today, trades by institutional investors exceed the volume of trades by retail investors. This is why trading bots are getting more and more common. More and more private investors are using at least one bot to increase their chances of making a profit.
The risks of crypto bots
There are many affordable and even free bots, but they are not without risk. An effective bot must execute trades quickly and have virtually no code errors. Developers use risk diversification strategies to determine profit consistency because even a small error can jeopardize one’s trading profits. The trader himself must run several trading bots and select only the ones that have a reliable record of generating returns.
The main risk in the industry is false advertising. Often, bots can be used with great results; but not be newbies, you need experience. Too many bots advertise that beginners can get rich quickly, and that’s just not true. Like anything in life, it requires education and hard work.
Legality and safety
Following up from the above – crypto trading bots are perfectly legal, but it’s hard to find the good ones. There are many poorly coded ones on the market and even outright fakes, which anonymous developers sell to gullible investors.
This is why the fact that they are legal doesn’t necessarily make all crypto trading bots safe to use. This is especially valid for traders who are used to trading big volumes in the hope of making a substantial profit from marginal price shifts in the underlying asset.
The risk of a huge loss is also substantial if you’re not using a reliable trading strategy. High trade execution speeds are not sufficient to ensure the desired results. Backtesting is a crucial element of any successful trading system. It involves replicating outcomes based on statistics to gauge a strategy’s potential success.
Stay safe by using verified platforms
Investment guidance apps like Invezz employ teams of finance experts with a lot of market experience. Invezz has dozens of staff and contributors who publish content in different languages, read by millions all over the world.
Invezz’s team has been trying to demystify investing and help ordinary people succeed in trading ever since the platform was founded. Before you resort to a trading bot, read some news and informational guides to enrich your background. Invezz is one of the most trusted financial comparison brands in the UK, making consistent efforts to provide new content and tools to help readers make the best investment decisions.
