Crypto has become incredibly popular in recent years, generating consistent returns for investors and traders. However, investing in cryptocurrencies is not an easy undertaking. Navigating the crypto market takes skill and know-how. Unlike conventional financial markets, which are open only during certain hours, crypto markets are always open; traders need to constantly monitor charts to avoid missing out on an opportunity to make a lucrative trade.
Trading on Autopilot?
Fortunately, there is tech available that can help both new and experienced traders understand what’s happening–automated trading solutions with AI engines. These are more commonly known as “crypto trading bots.”
By leveraging AI, computers adapt their strategies depending on market conditions without needing anyone’s input–which means more profit for less work.
An AI trading bot can aggregate historical data about a cryptocurrency, like its daily price over the course of a year or throughout the entire coin’s existence. The AI then analyzes that information and uses it to make predictions on future trends so it can make successful trades. When configured correctly, an AI trading bot provides investors with tools that bring them bigger and quicker wins.
Risk vs. Reward
Bots come with inherent risks–mainly that they rely heavily on past performance trends, meaning that new market conditions might lead to losses. Additionally, trading bots typically charge fees and require certain software and hardware. To use the bot, you need API (Application Program Interface) keys to connect to crypto exchanges and gather information for executing buy or sell orders.
For instance, if I wanted to set up my KuCoin account with a compatible trading bot, I would need the KuCoin API key, and I’d have to set up an account on the exchange and fund the account enough to begin trading. A successful trading bot has to be carefully configured before deciding which coin pairs to trade.
More AI Advantages
Trading bots also have added advantages such as FOMO-free investment decisions. Many novice traders lose their investment capital because of bad decisions caused by emotional states, but trading bots can eliminate emotional responses when making trades. Bots will not be swayed by emotions and won’t open or close positions based on sudden market swings; they’re ideal for investors who want to adhere to a specific trading method and have the discipline to learn how to configure and operate the bot effectively.
The continuous adoption of new technology has already changed the cryptocurrency industry. Five years ago, for example, a hands-off HODL strategy was king. However, automation is quickly taking over every aspect of trading, and it will not be going away anytime soon.
So the question then becomes: should investors maintain control of their own trading? Or should they submit to the inevitable “rise of the machines” and rely on AI trading bots instead?