December 23, 2022

Automated crypto trading – the ultimate guide

While the emergence of cryptocurrencies continues to provide opportunities to the masses, the trading niche, particularly, has seen an influx of attention over recent years.

Although technologies such as automated crypto trading are new, the cryptocurrency sector helped this space blossom.

A good trader is known to have a solid trading strategy that consists of reliable technical indicators, a sound mind, and disciplined habits that help them identify the opportune time to enter and exit trades. 

Similarly, a cryptocurrency trading bot also uses algorithms and technical indicators to pinpoint the “perfect” trade scenarios. 

What are trading bots, and how does automated trading work?

Introducing automated trading

Automated trading allows you to trade without being present physically. All you need to do is set up a trading bot to execute a strategy based on the price, a technical indicator, and or the value of your portfolio. 

You can combine automatic trading with other profitable activities like holding, staking, or even futures trading.

Automated crypto trading platforms are software and tools that help transform your cryptocurrency trading from manual to automatic. Most of these platforms will require you to create an account with a trading bot and choose a trading strategy you would like to use.

Once you’ve decided on the bot, the software will buy and sell your asset on your behalf based on the settings you’ve chosen.

Cornix, along with the majority of automated crypto trading platforms, functions as APIs.

API enables your account to connect with a cryptocurrency exchange and open and close trades on your behalf through a predetermined set of regulations.

Cornix also supports signal trading, when “signal providers” (traders providing opportune times to buy or sell positions) send trade alerts to their followers to replicate. 

Although not required, connecting to your socials like Telegram or Discord can easily be done by clicking “connect to” either Telegram or Discord.

After selecting your platform, you must create API keys which can be found under settings create API Key on most platforms. 

Generating an API Key is also a seamless process, as it usually only requires two steps to create it.

Types of crypto trading robots

The two main crypto trading bots available today are decentralized (or tokenized) platforms and crypto trading bot APIs.

Crypto trading bots APIs

These are the most popular type of trading bots available right now. To manage your investments, these trading APIs connect to different cryptocurrency exchanges. This is an excellent choice if you already have a cryptocurrency brokerage account on a reputable exchange like KuCoin or Binance.

Decentralized crypto trading bots 

Automated trading bots that run on the blockchain are another form of automated crypto trading. Tokenized crypto trading uses blockchain smart contracts rather than a website or API to conduct crypto trades independently. 

Your money is kept in a blockchain-based smart contract, and you control a portion that may be redeemed for other currencies using cryptocurrency tokens that the trading platform issues. 

Smart contracts are computer programs that carry out financial operations independently, according to the contract terms or agreement.

Since Ethereum is the most popular cryptocurrency that allows smart contracts, this code is often uploaded to Ethereum’s network.

Why should you use automated trading platforms?

Using automatic cryptocurrency transactions can provide you with several key advantages, including:

  • Speed and Accuracy: Crypto trading bots can buy and sell your assets much faster than you could manually since they trade using the software. 
  • Repetitive tasks: The majority of cryptocurrency trading bots available now trade around the clock. As a human, doing a task repeatedly can get monotonous, making you daunted. However, a robot doesn’t get tired of doing the same thing repeatedly.
  • Consistency: Bots are far more reliable than humans because they can run continuously and carry out commands based on predetermined signs. The risk of “emotional trading” is eliminated when utilizing a trading bot because it might be challenging to maintain discipline when trading cryptocurrency.

Maximize your success with an automated trading bot

Although nothing is ever 100% foolproof in life, automated trading bots are undeniably more efficient and consistent than human traders due to their ability to process masses of information rapidly.

It’s common to find that most traders use numerous bots simultaneously. Those tend to be the traders who, ironically, are able to profit in both bull and bear markets.

Easy does it

Spreading your capital over multiple trades rather than risking it all on one is a great way to mitigate risk. It can be tempting to go all-in-one trades, especially when the price is pumping on the charts in front of you. 

However, practicing proper capital management is key to a trader’s success.

Start slow

Most trading bots have an account minimum that needs to be met before they can trade. For some, the minimum can be as low as $25. Always start modestly to gauge the viability of your trade. Once you’ve developed the confidence and experience to improve your overall results, you can slowly increase the amount.

A green say is a good day

Many traders, especially those just getting started, fall into bad habits early, such as not knowing when to take profits and cut losses. Although the reverse is also a common problem, letting go of winners too early and holding on to losers too long, taking profits along the way up, can never make a losing trader.

The takeaway

Automated cryptocurrency trading is not a panacea that eliminates risks and controls volatility. It is a reliable solution that simplifies your cryptocurrency trading operations. Crypto bots are very simple to set up. They can guide you through the 24/7 world of cryptocurrency trading while protecting you from the adverse outcomes caused by your emotional decisions.