5 Of the Best Crypto Trading Bots Strategies
Can crypto trading bots help you earn more profits? These trading bots are nothing but software programs that know when to buy crypto coins and when to sell them. Their main purpose is to yield as much profits as they can for their customers. How do trading bots make this happen?
The bots monitor market movements and react depending on some prefixed rules. So, you are in control of how the trading bot will function because you can use your own preferences and tastes to determine how the software will evaluate market conditions like price, volume, orders, and time.
Should you use trading bots?
Using trading bots like bitcoin trader app is recommended especially for newcomers who lack the level of expertise and knowledge required to make good trades. Bots make trades far more streamlined and simplified. They can handle aspects like portfolio diversification, portfolio rebalancing, and index construction, etc. Moreover, bot seeks to outperform the market and make sure you can draw higher profits each time.
Best Crypto Trading Bot Strategies:
One of the first things that you must use is backtesting prior to selecting any bot. You must test it against the historical market data and make sure it is realistic. You can gather high-end market data through exchanges and libraries which let you interface with many exchanges. You need to pre-determine the strategy which your crypto trading bot must follow; so, you have to set the calculations and algorithms for this so that your bot knows what and when to trade. Once the strategy has been tested, you should apply it in real-time to check its efficacy. Finally, you must automate this entire process by creating a job scheduler.
The trading strategies are as follows:
This is based upon a direct assumption that when the price of any crypto coin shifts from the average, it will ultimately go back to this price. Incidentally, this assumption holds true for both cryptocurrency and traditional stock markets. The reason behind this strategy is market sentiment. Whenever the price of an asset goes up; traders are in a hurry to sell off their own assets in bulk. This brings down the prices, and once again, traders start to accumulate the asset. This makes the prices go up automatically.
This is done by momentum investors who will assess the rise and fall of the market according to its momentum. The best possible strategy is to ride a positive wave and then sell off the assets when the momentum reverses. The idea behind this strategy is that asset prices will always soar above the average and will eventually run out of steam and start plummeting. Here, the timings for the buy-ins and sell-offs are critical.
Prices of assets will vary across exchanges and this is because of price fragmentation in markets. Using this strategy you can easily make profits by buying and then selling assets in different exchanges.
This algorithm makes use of machine learning for determining how probable an event is. So, you can feed data into the trade bots and this will allow it to predict the perfect entry or exit times.
Natural Language Processing or NLP:
Prices in the crypto market swing dramatically according to breaking news, tweets and articles. Using this NLP the bot can be taught how to interpret phrases and words to evaluate the market sentiment.