I spent a little time during the other week doing a QProfit System review and, in the course of my research, I couldn’t help but notice that so many investors are flocking to crypto trading bots as the next great solution to their problems. Now, I understand that not all of these investors are discerning. Some of them are just leaping onto the bandwagon with no regard for where the bandwagon might be heading. However, there are many skilled traders using trading bots as well, and these are the ones that make things interesting.
I see advertisements everywhere about how trading bots are the easiest and quickest solution for crypto investors to trade automatically and begin earning a passive income immediately. It’s important to note that not every professional and skilled trader is going for these things, despite how every company claims to be selling the most useful crypto bot yet. However, the real question is whether one can simply let a computer trade for them and still make money.
If you’ve got a passion for cryptocurrencies like me, then you know just how volatile the markets can be. It always feels like a roller coaster when you open the charts and start to ride the price waves. Sometimes, they swing so wildly in such short periods that you begin to feel dizzy. In such an environment, you could make a huge amount of money, or you could lose your shirt. That is part of the reason why investors might think it’s a good idea to go for trading bots since they could save them time and money.
However, before you head to the nearest website and get yourself a trading bot, remember that a trading bot is ultimately no more than a tool. Imagine having a hammer and knowing nothing about carpentry. Imagine having a hammer and not having hands with which to bring it down on a nail’s head. As you can see, a tool is only as useful as the person behind the tool and the original strategy, which the tool is being used to implement.
There are many factors behind how successful a trading bot is. However, your trading strategy should be foolproof to begin with. It should not only be robust, but strong and consistently profitable as well. If you use it well, the trading bot can enhance your trading strategy and help you gain more insights and data that will help you improve that trading strategy. If the code behind the bot isn’t well-designed, then it would only make your losses bigger.
What we’re going to talk about today are the reasons why investors are flocking toward trading bots, and why you might also want to try out a trading bot today. As dangerous as these tools can be to the uninitiated, they can also be a massive advantage to the skilled investor who knows how to use them. Here are three important reasons why trading bots are useful.
1. They Are Faster
In the history of the markets since way back when tulips were traded (remember the tulip bubble?), arbitrage has been a way for traders who were quick and sharp to make money on the markets.
Arbitrage works in a simple manner. The best example I can give is something that isn’t even connected to crypto. Say you live in colonial America, and you head on to the market to buy a bunch of parsley. There are a few towns in your state and each of them has a market. For some reason I don’t know, you like moving to each of these markets and finding out the prices of items. That’s why you suddenly realize as you find out how much parsley costs in your local market, and that it is much cheaper than the market a few hundred miles away.
You decide that you’re going to buy a bunch of parsley at the favorable price, hire a coach and travel to the market where the price is higher. There, you will sell your parsley at the higher price and make a profit. Of course, the transportation of the parsley will cost you some money, and you’ll probably pay a little more for the right to sell at the other market and to set up your stall. However, you’ve done that math and it pans out. You’ll eventually make a profit, even after factoring in all these costs.
That is what you call arbitrage, and it has been a popular way for investors to make money since the dawn of trading. Of course, over time, other parsley traders will figure out that you’re making money from all the arbitrage, and they will begin to do the same. As a result, demand for parsley at your local market will rise, and the price of parsley will rise along with it. Eventually, the price of parsley will be equal in the two markets, and there will be no opportunity for arbitrage. You can then move onto potatoes or another commodity and do the same thing.
Arbitrage also happens on the crypto exchanges, where the price of an asset isn’t the same across all exchanges. However, because of the number of investors on these exchanges and the advantages of a fast internet, the arbitrage opportunities vanish too fast for you to take advantage at normal human speed. You also won’t have the time to scan the markets for constant arbitrage opportunities constantly.
That’s where a trading bot comes in. It acts fast on your behalf and takes advantage of those opportunities for you. That way, you make your small profits a lot more rapidly, and they accumulate quickly.
2. They Work 24/7
You’re human, which means you need to sleep. You can’t sit in front of your computer all day concentrating on the candlesticks. Even if you can, it eventually gets exhausting. A trading bot, however, can do even more than that. It will not only constantly watch a single chart, but it will also watch multiple ones across multiple assets and multiple exchanges. It will also trade and implement your strategy without fatigue. We all know money never sleeps, so why should your trading bot?
3. They Help You Develop Your Strategies Further
Trading bots work according to the set of rules that we give to them. These rules aren’t permanent, however, and they are subject to the changing conditions of the market. To be able to improve our strategies, we need data, and that can only come from trading a lot and collecting data from those trades. Nothing can trade more frequently and record data as much or as accurately as a trading bot. With a trading bot, you can enhance and improve your strategy much more quickly than when you’re on your own, allowing you to achieve your trading goals much faster.