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Top Crypto Trading Strategies to Automate

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Top Crypto Trading Strategies to Automate

Because of the volatility of cryptos, traders must be careful not to miss out on important trades. It is difficult for traders to respond quickly enough to take advantage of price movements. Also, the crypto market operates 24 hours a day, seven days a week.

In order to achieve the greatest trades, crypto traders must be up all day and ready to trade at any time, which is close to impossible. Furthermore, due to delays in some trading exchanges and transaction times, some traders may miss out on lucrative trades. All these can be avoided by automating crypto trading strategies.

What is automated trading?

Robots are used in crypto trading. Algorithms can trade digital assets for an investor automatically. The programs that use algorithms to trade are often referred to as trading bots. Bots use Application Programming Interfaces (APIs). These are software intermediaries that allow different apps to communicate with one another. This means that exchange can communicate with your account. These bots can use your account to carry out trades using your assets.

Bots are popular among investors because they may run 24/7. This implies they can quickly detect new market trends or changes and, as a result, make more timely decisions. They are also a viable choice for those with limited expertise and a limited understanding of the crypto market. 

There are a variety of automated trading platforms available, each with its own set of trading bots. These platforms also include template trading strategies that you can utilize to create your own.

Strategies to automate

Arbitrage

This involves buying and selling similar cryptocurrencies at different prices in two different marketplaces in order to profit from the difference. For example, if an investor sells for more than the buying price after taking into account the exchange rate difference between the markets, they may benefit without risking the market mismatch.

Arbitrage traders, on the other hand, must conduct extensive research in order to make a profit. Finding suitable market opportunities is one of the most difficult tasks. Because arbitrage traders are not required to consider the actual market circumstances and performance of the crypto market, it differs slightly from the regular market.

The only concern you have while implementing arbitrage is finding exchanges with various pricing for the same asset. This procedure can be exhausting. Furthermore, while looking for opportunities on your own might take a long time, adopting arbitrage as an automated crypto trading method can make your job much easier.

Grid

This approach uses predetermined price intervals and postponed limit buy and sell orders. The price range you select will be divided into several tiers, resulting in a grid of orders.

Grid bots follow this method and continue to profit from market movements even while you are not at your computer. Because all of the grids are interchangeable, the bot will construct a new sell order above the executed price for every completed buy order and vice versa.

The grid technique is counterintuitive in that a coin’s price must go up and down; therefore, it sells when it’s high and buys when it’s low. Grid bots will buy low and sell high for you instead of spending hours analyzing charts to profit from market swings. They create consistent earnings without relying on sophisticated algorithms, instead of relying on the grid specifications you provide.

Scalping

This is an approach that aims to profit from minor price changes. Traders aren’t looking for big moves; instead, they want to profit from small price fluctuations repeatedly. As a result, scalpers can execute a lot of trades in a short amount of time, looking for small price movements and market inefficiencies.

Because of the short time periods involved, scalpers will rely heavily on technical analysis to build trade ideas. Because the opening and closure of orders are carried out automatically under a rigorous specified methodology, scalping with bots produces much better results.

Scalping bots are best for quick trades that last a few minutes or seconds. Using indicators and patterns, they generate trading signals for a level breakout or rebound from it within a certain range. Working with such a large number of instruments, they will almost certainly not miss a solid signal to open a trade. 

Classic bot strategy

This is a function of the Bitsgap platform. The classic bot buys and sells a fixed amount of the base currency per order to maximize the return from each completed trade due to a progressive increase in the volumes as the price goes up.

When you predict the market to be in a strong uptrend, you should adopt the Classic bot strategy. Due to its investment distribution logic, which obtains better market exposure when the price rises, the Classic bot has statistically proven to be more effective than the other methods during price rallies. The Classic bot buys a fixed number of coins and hence increases the total amount invested on the rally.

Mean reversion

The theory is also known as reversion to the mean, and it states that asset prices and volatility have a tendency to return to their long-term average values. The trading concept focuses on capitalizing on extreme price swings in assets, and it asserts that the price will almost certainly revert to its original state.

It should be noted; however, that mean reversion theory is primarily concerned with the reversion of somewhat dramatic changes such as normal growth or other market price movements, and all of these price movements are essentially part of the paradigm. 

Summary

The automated crypto trading procedure is based on the outcomes of many market analyses and computations, and it does not take into account human factors such as fatigue. It is also unaffected by emotional ups and downs. Bots work around the clock and are far more efficient than manual clicking. Arbitrage, grid, scalping, classic bot, and mean reversion strategy are all strategies that can be applied in automated trading.

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