Automated cryptocurrency trading - a way to make money or just another scam?

Given the endless variety of offerings in the cryptocurrency market regarding cryptocurrencies and trading schemes, there are various ways to make a profit with your investment capital. For example, centralized crypto exchanges offer a variety of trading techniques and approaches that do not require your 24/7 attention.

However, all the variety may be too much, too difficult for a beginner. Pretty soon, what seems like a nice part-time job to make money on the side will become a full-time job—if not an obsession—if you want to make any tangible profit at all.

This is where automated cryptocurrency trading comes into play.

How does automated cryptocurrency trading work?

Trading is a largely manual process that requires time and effort before you master it and get to a level where you are comfortable do it yourself.

However, the truth is that not all of us have the technical means or time to trade cryptocurrency on our own. Despite the best efforts of trading platforms to simplify the process of buying and selling cryptocurrencies, planning and executing trades, the learning curve remains difficult for many users.

This is why automatic cryptocurrency trading appeared. Crypto traders are gaining popularity to help them strengthen their crypto portfolios and earn some coins.

Algorithms are the key component that makes automated trading automated. Essentially, algorithms are a set of rules that are followed in computational calculations and problem-solving operations. You may have already heard about the power of algorithms in social media, using them to deliver content based on your activity and likes.

The same can be said for algorithms in the cryptosphere, where they are used to trade cryptocurrencies and related digital assets using programs called trading bots.

These bots use software intermediaries called application programming interfaces that give your trading account the ability to interact with the crypto exchange on your behalf and execute custom trades using your digital assets.

Can you make a profit from automated cryptocurrency trading?

Yes, you can make good profits with automated cryptocurrency trading bots if you set them up correctly. However, they are also not foolproof - you can just as easily lose your capital using a trading bot if you fail to test them rigorously.

To consistently make profits with automated cryptocurrency trading programs, you need to constantly calibrate and recalibrate your strategies and conditions based on market trends. After all, there is a reason why large financial institutions, banks and investment funds use trading bots.

Is automated cryptocurrency trading legal and safe?

It is perfectly legal to use automated bots to trade cryptocurrency—in fact, they have often been used in traditional stock markets.

But here's the thing: not all exchanges allow the use of bots. Check with your broker to see if they allow bot trading before spending money on buying one or spending time creating one.

It's time to talk about security. This depends on how well the automated trading bot is built and how often its performance is monitored. You can't just set it and forget it and expect to make some profit - otherwise, if it were that easy, everyone would be a millionaire. Market volatility and dispersion are real, and no algorithm can prepare for all potential outcomes in a market as volatile as cryptocurrency can be.

However, trading bots have the ability to help traders deal with emotional swings, impulsive trades, or trade manipulation (a costly mistake!) that can lead to complete and total liquidation. Trading bots optimize, organize and trade on your behalf based on a specific set of programmed preferences.

Pros of automated cryptocurrency trading

Automated cryptocurrency trading bots can bring the following significant benefits:

• Higher trading speed and accuracy.< /b> Automated cryptocurrency trading bots can execute trades faster than a human due to special conditions, indicators and preferences. Bots can react instantly to market conditions, enabling accurate and fast trading.
• Optimize repetitive tasks. Cryptobots, unlike humans, do not require eight hours of sleep to perform at their best. . They can automatically trade any market 24 hours a day, 7 days a week, eliminating most of the mundane, tediously repetitive tasks that traders often have to deal with.
• Less room for error. Because bots can be programmed to constantly work and carry out orders on your behalf, they leave you with less room for error and help curb the emotions and impulses that can lead to rash trades. Working with algorithms helps you be more consistent in your trades based on programmed instructions.