Cryptocurrencies, especially Bitcoin, have evolved from being a topic that’s only mentioned in the niche FinTech industry into mainstream media. This type of money is a digital asset and one of its most notable characteristics is that it’s not controlled by a centralized agency like a government or financial institution. Instead, transactions are done peer-to-peer, which are recorded in a distributed ledger technology called a blockchain or a public database.
You can earn Bitcoin through mining, which is the process of having your computer solve complex mathematical problems from the blockchain to facilitate transactions. In return, you get digital money as a reward for your efforts. If you have an e-commerce store, you can also gather BTC by using it as one of your payment methods.
A Glimpse of Bitcoin Trading
An easy way to earn Bitcoin is through trading. It involves exchanging your fiat money or real cash for BTC and using that capital to trade. This means buying more assets when the price is low and selling them when their value increases.
There are four primary ways to trade Bitcoin:
Day Trading – This method entails checking the cryptocurrency’s value in the morning and buying when the price is optimal. You then check later, as the trading day is about to end and sell for the highest possible rate.
Scalping – Scalping is the more aggressive counterpart of day trading since it involves buying and selling your digital assets several times in a span of 24 hours. This is ideal if you want to gain continuous profits, but you should note that it has a smaller margin since you’re just waiting on slight price movements.
Swing Trading – If you want to try your hand at swing trading for Bitcoin, you should know that it requires a strong gut instinct on trends. You should be able to spot when the next high or low is since you want to take advantage of that momentum.
Automated Trading – While the other methods necessitate your active participation, automated trading is for those who want to ride the cryptocurrency mania without having to sacrifice so much time in monitoring the volatile market. You can take advantage of Bitcoin trading bots, which are software that you can configure to suit your trading preferences and needs.
What are Bitcoin Trading Bots?
A Bitcoin trading bot is a program or app that tracks various indicators to spot trends in the market and automatically perform trades on your behalf. The premise behind this technology is that computers can help you succeed in this venture more because of their processing power. They can do the math and calculate statistical probability with precision, which comprises the data you need to gain immense profits in trading.
This algorithmic software is a relatively new player in the world of cryptocurrency trading, but lots of people have already gained profits from using them. You simply connect the program to your cryptocurrency exchange account and enable it to make trades for you. They monitor market signals such as moving averages and indices to spot when is the best time to buy assets or sell them.
Check out Wunderbit Trading, a platform that allows you to automate your crypto trading and create automated crypto bots.
These are some of the technical indicators tracked by trading bots:
Day Filter – With this signal, the bot will only push through with the transaction if the current day has a lot of potential for profit based on the ups and downs of the previous day. If you set the program to trade long and the last day had positive results, the software will open the deal.
Volume Filter – The bot will assess the trading volume over the past 24 hours and, if it’s deemed sufficient, it will enter the market. You can set the limits and configure advanced features to maximize this filter.
Bollinger Signal – This indicator calculates the standard deviations, which are believed to be a measure of volatility, from the moving average. The bot can look for the ideal entry point based on this signal.
Why You Should Give Bots a Chance
Because this technology just came to the industry fairly recently, it’s unwise to conclusively confirm that Bitcoin trading bots will allow you to gain more profit than traditional human traders. The software can facilitate beginners as they start this venture, but it’s best to learn more about the market and do your research to gain a considerable understanding of this digital currency.
Nonetheless, it looks like trading bots are here to stay. Here the advantages of using them to expand your Bitcoin wallet:
Additional Income Option
The primary benefit of using trading bots is that they offer you a chance for some side hustle. If you’re working a 9-to-5 job, chances are, you feel like you don’t have enough time and energy to invest in another venture. With automated trading, you can set the program and leave it to do trades on your behalf. You are kept up-to-date through notifications that are sent to your phone real-time.
More Insight on Risks and Returns
The data provided by trading bots can give you a realistic view of the risks that you’ll be facing as well as the returns that you can expect. This is a definite advantage for this ultra-volatile market. If you’re a beginner, you can try low-risk strategies first as you study the market.
Constant Market Interaction
Because Bitcoin and other cryptocurrencies aren’t bound by one country or financial institution, transactions can happen any time, which results in BTC’s volatility. Trading bots don’t need to sleep, so they can monitor price movements and analyze them to make trades during optimal periods.
Objective View of the Industry
Computers aren’t plagued with emotional bias. They’re all about solid facts and figures, so you can be sure that the decisions they make on your behalf are sound and not affected by mood swings.
Ultra-Fast Processing Power
Trading bots can perform tasks faster than any human can. While humans have to drag around the mouse and click on the button to push through with the transaction, the software has already connected with a legitimate cryptocurrency platform and proceeded with the trade.
Bitcoin trading bots are handy tools for beginners and seasoned traders alike. This technology can help you keep a close eye on market trends as well as perform trades automatically when the time and price is right.