Due to the volatility of the market today, trading bots are now becoming more popular to traders because it allows them in remaining control of the trading all the time and the advantage to where the bot does not sleep. A properly specified bot also allows trades to be executed much faster and more efficient than traders who do it manually.
Trading bots are considered to be software programs that directly interacts with financial exchanges and places which sells or buy orders for you, which however will depend with the interpretation of the market data. Bots also are the ones which makes the decisions by monitoring the market price movement as well as to react based on a set of predefined and pre-programmed rule. The trading bots likewise will analyze market actions such as the time, price, volumes and orders, but these can be programmed in suiting your own preferences and tastes.
These trading bots also have been popular for so many years in different conventional financial markets. However, it was not traditionally available before for any average investor because it actually costs a lot of money. The fact that there are many people today who are trading bitcoins and are unable to dedicate more of their time in analyzing the market, the intention is that bitcoin will allow users in establishing an efficient trading without keeping on the top of the market all the time.
Trading bot works through reacting on the market. This is going to gather all the necessary data which it needs for executing a good trade that’s based on the analysis of the trading platform. In cryptocurrency, trading platforms will only tell half of the story and a lot of rises and falls based with the sources which can’t be programmed to the bot for analysis. Also, the spread between the exchanges flattened somehow, which means that opportunities on inter-exchange arbitrage are lower than the years before.
There’s so many trading bots which use an exponential moving average (EMA) as the starting point on the process of analyzing the market. EMA is then going to track on the market prices on a set period of time and bots could also be programmed for reacting on what the price do like moving certain thresholds. By programming the bots, the trader could then set the thresholds on corresponding on the risk appetites.
This simply means that trading bots works but is not necessarily for all. There are also different advantages like having a constant interaction on the market and a non-insubstantial factor for removing the emotion on trading.