What is trading?
Unlike buying digital currency, trading does not consist of owning digital currency units. Instead, it requires to speculate on the price movements by using CFD trading instruments. In this case, you agree to exchange the difference in the price of the digital currency, with the hope of making a profit from price movements.
Trading can also involve buying digital currencies via one of the exchange platforms. This way, you take ownership of the amount of virtual money you bought and keep it in your digital wallet and sell it when its value increases.
What is robot trading?
Robot trading is an automated trading system (ATS) based on mathematical algorithms that allow traders to rely on computers that execute user-defined actions and follow pre-set rules.
The robots use the available data to make the best decisions concerning when to trade and what trading opportunities to seize, which enables people to carry out the trading process without actual human assistance.
How can trading robots be useful?
One of the most important advantages of trading robots is that they are not human.
First, robots are completely rational and don’t have to go through psychological strains and breakdowns involved in trading.
Second, people generally cannot have full control over their feelings; this gives them a hard time in trading when things don’t happen as planned. On the other hand, robots stick to the trading strategy with discipline and accuracy despite the gravity of the situation.
Moreover, robots do not have the biological needs of people; they can work for 24 hours all week long nonstop, without needing to eat or to sleep.
Finally, robots can process information really fast and are able to generate orders as soon as the criteria are met. This advantage matters a lot in trading because the shortest delay can change the outcome of a trade.
How does automated trading work?
Those willing to use crypto trading bots will have to choose a platform first. Then, based on their knowledge and experience in trading, they will have to set the parameters of their trading strategy. The robot will then execute the orders and place trades when the predominant parameters are satisfied.
How to trade cryptocurrencies?
The cryptocurrency market is known for its volatile nature. If we take Bitcoin as an example, we can see that it has known many rallies and crashes since its creation in January 2009. Although Bitcoin is considered to be the most successful digital currency in the market, its price was not stable at all over the past decade.
However, the price of Bitcoin has been increasing steadily since September 2020 after PayPal announced to its US customers that buying and selling digital currencies would be possible in the first term of 2021. The climb was remarkable, and on January 8th, 2021, the price of Bitcoin reached $41,000 exceeding by far its previous all-time high.
Cryptocurrency trading can be tricky because of the extreme instability of the cryptocurrency market, but its volatile nature is what makes it generate big gains for the traders.
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