Do you know what a crypto trading bot can do for you? If not, you should not unnecessarily invest in one just because everybody else around you is. When you invest in crypto assets there will always be the big risk of losing a lot of money. This risk is amplified when you are a newcomer with very limited knowledge of how the crypto market works. Even experienced traders can lose out on money because not every trade will succeed. Even an economy stalwart like Warren Buffet suffered losses to the tune of $23 million during 2008. Using a trading bot can eliminate errors that are likely to be made by humans but whether or not it is better than trading manually remains to be seen.
What are the advantages and drawbacks of using Bitcoin trading bots?
- The Bitcoin trading bots are preferred because bots can execute trades on behalf of us round-the-clock. Regular stock markets will be active only for a fixed number of hours during the day, but the crypto markets are always open. When you have a bot working for you, you do not have to worry about missing out on good trading opportunities.
- Using a bot eliminates the chances of making wrong decisions based on emotions and whims. Trading is bound to trigger emotional highs and lows; these will invariably interfere with trading outcomes. For instance, if you fear bad news, you will try and sell off your assets in a hurry instead of waiting for markets to recover.
- Bots will save you precious time and money. Trading is a tedious task and you must continuously monitor trading charts and graphs. With a bot, these mundane tasks are taken care of.
While these are some of the biggest advantages that crypto trading bots can offer there are some drawbacks too that you cannot afford to overlook.
- Since there many crypto trading bots out there, choosing the best is not easy. You need to research on the options beforehand and consider customer feedbacks. There may be scams lurking in these and you can be duped in the process. While some trading bots are free like Gekko, there is the possibility that they may not be as sophisticated as the ones you can avail of through subscriptions, like Crypto Trader or Haasbot. The recently launched trading bot bitcoin lifestyle is a worthy try.
- Bots have to be updated continuously because the crypto market is changing all the time. So, you to keep changing the instructions from time to time to ensure that the bot makes the right decisions for you.
- Crypto trading bots will not be able to take into account insider knowledge, breaking news, fundamental analysis, or many other things that can move the market. The strategies offered by bots are typically quite simple; a bot could only be performing arbitrage. This involves buying multiple crypto coins from different exchanges so as to get benefits from differing prices for one asset. In other words, you can use a bot to buy Ether from one exchange and sell it in another for a higher rate. This is a profitably strategy no doubt, but you cannot be sure if it is the best one under the circumstances.