Automated Crypto Trading What You Need to Know Guide

by Jhorton Jennifer Marketing Consultant

Traders no longer have to spend hours glued to the screen studying chart patterns, all in the effort of identifying trading opportunities thanks to advancement in technology. Automated crypto trading is the latest sensation that is allowing traders to invest in the burgeoning sector with little or no work.

Understanding Automated Trading Systems

Automated trading systems have found their way into the burgeoning crypto space allowing traders to set rules for entry and exit when trading various digital currencies. Such systems leverage advanced technologies for analyzing the market and studying chart patterns.

Once a given set up marches set rules for entry, an automated system would open a position, be it long or short. The system also closes positions allowing traders to lock in profits or avert losses as soon as set conditions are met.

The entry and exit rules leveraged by an automated trading system are based on simple conditions such as Moving Average crossover. Likewise, there are systems that leverage momentum moving indicators to enter and exit trades based on oversold overbought market conditions.

Automated Trading Systems in Cryptocurrencies

Automated crypto trading systems are becoming a common phenomenon in the cryptocurrency space as investors explore ways of making good use of the extreme levels of volatility in the space. Trading bots are at the heart of automated trading in the space as traders look to gain an edge when it comes to price action.

3commas, TrailingCrypto Cryptohopper are just but a few trading bots that are taking automated trading to another level in the space. The bots not only generate trading signals but also execute the orders and exit trades, allowing traders to lock in profits without doing much.

A good automated trading system is one that is able to scan the entire cryptocurrency market in pursuit of trading opportunities. Likewise, the system should be able to execute the orders in real-time and lock in optimum profits. Similarly, it should have countermeasures for mitigating against losses that might come into play in the process

Advantages

One of the biggest advantages of automated trading systems in cryptocurrencies is that they are proving to be helpful in making decisions related to trading. The systems avert the risk of making emotion-driven decisions. Instead, entry and exit points are triggered based on a predefined set of rules

Automated trading systems also avert the need to spend hours on the screen in pursuit of trading opportunities in the cryptocurrency market. Instead, such trading assistants are able to scan the market 24/7, identify opportunities, and execute them, thus allowing traders to lock in profits.

Similarly, automated crypto trading systems enhance the execution of entry and exit points, allowing traders to lock in optimum profits. Computers tend to respond instantaneously to changing market conditions. Getting in and out of trades a few seconds makes a big difference in the highly volatile cryptocurrency market

Disadvantages

Automated trading systems rely on technologies that are prone to errors, as is the case with humans. Loss of internet connection could result in missing out on a trading opportunity as an automated trading system would not execute a trade.

Contrary to perception, automated trading systems also need to be monitored as they can make catastrophic errors leading to a significant loss. Mechanical failures, as well as connectivity issues and computer crashes, are some of the things to watch out.

Conclusion

Automated crypto trading systems are simply trading assistants that allow traders to establish rules for opening and closing positions, which are automatically executed.

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Created on Jun 7th 2020 22:56. Viewed 414 times.

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