Advantages and Disadvantages of Cryptocurrency Trading with Robots |
Posted: February 3, 2021 |
In our brief review, we will focus on trading on a crypto-exchange using the Binance bot. We will consider the main advantages and disadvantages of using trading robots, and each of you will be able to decide for himself whether to use such programs to make a profit. Trading robots are specialized programs that automatically make transactions for the purchase and sale of exchange-traded assets, taking into account the parameters that are set by the trader in accordance with his trading strategy. On the one hand, the more parameters that can be set, the more flexibility in trade management. On the other hand, setting up many parameters for profitable trading is a non-trivial task that will require practical skills and trading experience. In fact, trading with robots has been going on for a long time on the stock exchange. Bots are widely used for trading . Now robots are used to trade crypto-assets. How do I get a robot? There are several ways to purchase a trading robot: 1. Take a free version of the program; 2. Rent the program; 2. Buy an existing program; 3. Order a program with certain characteristics; 4. Write the program yourself. The free version has a set of standard functions that give signals to buy or sell an asset based solely on the technical indicators of indicators. As a rule, there are a lot of false signals among the signals. You can trade with free bots only by analyzing each signal yourself. This deprives trading with a bot of its main advantage - automatic execution of profitable trades. You can rent a good paid program. You must pay for the services of such programs on a monthly basis. Among the software robots, you can choose very good options with a guaranteed percentage earnings. When using a rented program, you can resort to the help of developers and solve technical issues that are associated with setting operating parameters. This is a good opportunity to use high-quality robots for full-fledged automated trading on a crypto-exchange for a moderate fee, which is distributed in the form of rental fees. The disadvantage of this option may be the situation when the monthly fee for using the robot will be comparable to the monthly income that the bot brings. It is much more interesting to buy an existing program as a property. This will require a certain initial cost, which may well pay off in the future. A more expensive option involves writing a program to order. In this case, the customer must himself know what parameters the bot needs to analyze and on the basis of what to form buy or sell orders. Trading with expensive and high quality software can be very profitable! Manufacturers of trading robots claim that their programs allow generating algorithms for trading not only based on complex mathematical calculations, but also through the use of artificial intelligence. The program monitors a trader's actions and adapts to his trading style, and then makes trading decisions in accordance with his trading strategy. However, the developers of such robots can "provide" in the program the ability to "share" the profit from transactions without the knowledge of the owner. Roughly speaking, programs, having access to a trader's account, can steal crypto assets without being noticed. There are also those who are able to transfer all the trader's funds to the wallets of fraudsters. The best defense against such programs is to create a program yourself that would meet all your requirements. There can be only one drawback - insufficient qualifications of the creator of the crypto-bot. The bot is connected to the exchange using the API. API (Application Programming Interface) is a software shell that allows you to connect a robot to exchange standardized information about the course of trading on the exchange and provides the ability to make transactions to a software bot. As a rule, trading robots are created specifically for the API of a particular exchange. If some exchange does not have its own API, then you can still connect the robot and the exchange, but the development of the program will include the API module and will cost much more. Currently, trading robots are a fairly common product that is offered not only by large IT companies, but also by individuals. Thus, at a reasonable price, you can pick up not one, but several programs at once that satisfy the basic needs of traders. What are the advantages of robots when trading with them? - Speed ??of information processing. Analysis of the current market situation, taking into account the history of transactions and forecasting price dynamics, takes a few seconds, after which a decision is made on the expediency of a particular transaction. For a person, this process takes a long time and requires constant attention. Robots can work 24/7 without interruption. - Comprehensive tracking of price movements across a large number of assets and across several trading platforms at once, allows you to identify critical situations at an early stage and exit an open position with minimal losses. And it is almost impossible for a person to analyze such a large amount of information. - The robot always adheres to a given strategy and is not affected by emotions. Sometimes novice traders, analyzing the market situation, give in to panic and close potentially profitable trades or make other mistakes when trading, succumbing to the market sentiment. - The accuracy and correctness of the program calculations is determined only by the specified user parameters. Mathematical errors are excluded. Whereas a person can make mistakes in calculations or analyze price charts by eye. Despite the fact that trading programs have such advantages over ordinary traders, they are rarely used by experienced investors. Beginners are also in no hurry to resort to their help. What are the disadvantages of trading robots? Let's start with the fact that robots are just programs written by people that contain developer errors. They can freeze, crash at the most inopportune moment of trading, and often require updates. Setting up a robot for profitable trading is a complex process of finding compromises between program parameters. Sometimes the selection of the optimal parameters is made according to the subjective opinion of the trader. The result of a bot's trade will indirectly reflect the qualifications of the person who set up the program. One of the main disadvantages of robots is the frequency of transactions. The speed of the analysis allows you to quickly make a decision to open a profitable trade. In conditions of high volatility, trend reversal often occurs. This entails the closure of unprofitable positions. As a result, the exchange commission for opening / closing positions may exceed the income from transactions. Of course, in good robots, this parameter must be adjusted, but the regularity of transactions is one of the important indicators that must be selected in practice for each strategy separately. The most complex, customizable program is capable of making a profit, as a rule, only in typical situations that lend themselves to technical analysis. Sometimes large players enter the market and manipulate the market. Standard trading of a robot in abnormal situations can bring large losses. At the moment, there are a lot of offers of programs for trading on the exchange on the network. But not all of them are reliable. There are robots capable of transferring the assets of the "owner" to the wallets of the creators of "fraudulent bots". Even the most advanced artificial intelligence software is unable to analyze fundamental news and assess their impact on the crypto market. In this case, only an experienced trader is able to make decisions. Thus, we can conclude that trading with a robot can facilitate the work of an experienced trader by generating "tips" that a person could not pay attention to. A bot can take on part of the routine work of algorithmic calculations and analysis of a large amount of information. But a bot cannot completely replace a person in trading. To develop abilities, a novice trader must constantly acquire new knowledge and apply it in practice. A robot can help a beginner make a profit, but robots cannot yet teach him how to trade correctly.
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