What Role Do Bots Play In Cryptocurrency Trading? 

Ever since the beginning of cryptocurrency trading, bots have existed to make things easier for traders who have other things to do or have little experience with trading. These bots are similar to the ones used by Wall Street gurus. They don’t just make trading more convenient, they also reduce the risks attached to trading digital assets. As time passes, more advanced software have been developed to help investors.

Trading Bots And Cryptocurrency

At this point, no one knows what the future holds for blockchain technology and interoperability. However, one thing is clear, trading bots are always going to be excellent tools for institutions and individual traders. They can be used to efficiently manage large orders and minimize the risks attached to trading.

Bitcoin (BTC) Price Today – BTC / USD

Name Price24H (%)
Bitcoin (BTC)
$5,531.00
4.89%

During the price peak last year and in the beginning of this year, many trading bots focused on arbitrage trading between different exchanges. Exchanges from South Korea were able to increase their premiums by 30% in December 2017 when compared to United States exchanges.

The popularity of arbitrage trading came at the same time the trend in the market was positive and cryptocurrencies were increasing in value dramatically. So, the rational way to benefit from arbitrage was to use trading bots. These bots allowed traders to monitor their positions with predetermined parameters without facing their computer screens all the time. These bots also became popular because they eliminated the emotional aspect of trading that is prevalent with humans.

While trading bots have a lot of advantages, statistics have shown that they are also used for improper practices by bad actors in the industry. A recent report from Wall Street Journal cited some cases of spoofing across markets. Another report by Virgil Capital stated that their bots are used to fight enemy bots in the market. Trading bots in an unregulated market allow investors to take advantage of market manipulation. They also give small scale investors the tools they need to level the playing field.

With the advancement of technology, trading bots are becoming more intelligent. Many of them now offer diverse data feeds along with real-time indicators and options for customization. They are becoming useful tools for mainstream investors who may not understand sophisticated trading. As the needs of the market increase, trading bots will evolve to meet with them. When the long awaited institutional investors start flooding the market, things like volatility, manipulations and trading risks will reduce. At this time, the popularity of trading bots will increase dramatically. Advanced machine learning and AI components will be used to make them smarter than they already are.

However, it is important to note that the cryptocurrency market is not currently at its best place. Prices are low and dropping on a daily basis. No one knows when the bloodbath will stop. The top cryptocurrencies are all recording double-digit loses. So, if you’re considering investing in cryptocurrencies, you should wait for a little stability in the market before you put in your capital. On the other hand, the best time to buy is when prices are low. This is also the riskiest time to buy.

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