Automated Cryptocurrency Trading: Pros and Cons

Automated cryptocurrency trading is all about mechanical trading systems, automated cryptocurrency trading software, algorithmic trade which permit the traders to set specific instructions for the entry and exit of the trades and it gets automatically executed by your computer. Over 75% of the stocks traded on US stock exchanges work on automated cryptocurrency trading.

Beginners who want to enter the cryptocurrency trading who has no knowledge of trading can develop a profit-making trading strategy or opt for copy-trading strategies and enjoy good profits. It is very important to choose the right trading strategy to make profits. The testing and refining of a strategy may take a long time and should involve back testing over several time frames to find out whether your chosen strategy is robust or not.

Often beginners go for copy-trading. The major benefit of copy-trading is the ability to follow successful traders who have good track records and have tested trading strategies in their heads.

 

How to trade with automated cryptocurrency trading?

Automated trading means you need to have a trading system which wipes out human intervention in the buying and selling of cryptocurrency. Find out the different factors which you need to follow in your strategy first.

1. Direction of the market
2. Position size
3. Risk management guide
4. Money management guide
5. Technical indicators

Pros of automated crypto trading

1. It doesn’t involve any emotions in your trading decision procedure

When you choose a systematic trading method, you eradicate human interference and you can also avoid getting influenced by your emotions which sometimes has negative impact on your trading performance.

2. It permits you to trade 24 x 7

As your computer model and program execute the trade based on a pre-set criterion, your system works round the clock. You can hence make money all round the clock.

3. It permits you not to sit in front of screen all day

Though creating an automated strategy takes time and energy, an automated trading system lessens your daily effort and allows you to dedicate your time to other things when your software is performing profitable trades for you.

4. It offers you to enhance order execution

Computer software used in trading are an amazing way to enhance order entry speed. Once your strategy opens an order, all the other connected orders will also open such as take profit and stop loss orders which can make a difference in your trade.

Cons of automated crypto trading

1. You cannot make discretionary choices

Automated crypto trading is the opposite of discretionary trading. It means you cannot choose the entry and exit of your trade depending on the present market conditions. You need to equip your trading strategy for it and it will work the same during every market condition.

2. You completely rely on technology

Though automated trading separated human emotions from trading, but it has its own limitations like internet connectivity issues, network crash, server problems etc. So, though it may make rational decisions, but it has its own limitations.

All in all, automated trading gives you free time to dedicate to other things and hence frees you from doing anything.