Expert Insights: Navigating Potential Benefits and Drawbacks of Crypto Trading Bots.
Summary:
Cryptocurrency traders looking to leverage trading bots must bear in mind both their potential benefits and inherent limitations. These bots can efficiently process a vast amount of changing market data 24/7 and execute trades, but they are restricted to their programming and fail to adapt to unforeseen market changes. Ten experts from the Cointelegraph Innovation Circle advise maintaining constant monitoring, using reputable exchanges, comprehending the impact of AI and historical data, noting the necessity for human intuition, being aware of variable trade scenarios, and considering market sentiment before fully relying on trading bots. They also highlight the importance of risk management and thoughtful decision making in cryptocurrency trading.
In the fast-paced and continuous operation of investment arenas, notably the unpredictable terrain of cryptocurrency, it's understandable for traders to seek assistance from trading bots. These automated systems keep a 24/7 watch on the market, combing through constantly changing data, and on cue buy or sell cryptocurrency. Bots are sleepless, immune to exhaustion, free from impulsive decision-making or emotional biases, and respond instantaneously. Their efficiency makes them a valuable resource for crypto traders, but their utility comes hand in hand with certain drawbacks. Traders depending heavily or uncritically on bots may end up with less than satisfactory results. Following are insights from ten members of the Cointelegraph Innovation Circle for traders looking to integrate trading bots into their investment strategies. Their advice could aid both newbie and seasoned traders to smartly and profitably employ bots.
Always keep in touch. Just like any innovation in the artificial intelligence field, technology is only as good as its coding. The point to remember while using trading bots is that expectations must be managed and constant tabs kept to ensure their actions are as planned. Unthinking dependence on automation can lead to remorse. – Oleksandr Lutskevych, CEX.IO
Use a reputable exchange. When it comes to applying bots on-chain, opt for a well-reputed exchange with robust developers. As code will regulate your trades, you need a trustworthy exchange that matches your risk appetite. Always do your due diligence and remember that trading, with or without a bot, carries risk. – Megan Nyvold, BingX
Realize bots may struggle during unpredictable circumstances. Keep in mind, trading bots, though capable of automating and enhancing transactions, do not possess human intuition and falter with sudden market shifts. Their functionality is defined by pre-set rules and can be greatly affected by unpredictable market incidents, necessitating human supervision and occasional manual intervention. – Tomer Warschauer Nuni, Kryptomon
Be skeptical of bots operating solely on past data. Traders should be wary of bots functioning only on historical data. They may fail to comprehend significant market shifts caused by unforeseen events like changes in regulations or technological breakthroughs. Traders need a wider understanding of the market to foresee and factor in these changes. – Vinita Rathi, Systango
Understand when your human intuition is necessary. Trading bots are not infallible. They can face technical glitches, software bugs, and rapid market changes, potentially causing heavy losses. The absence of human intuition is a significant factor here. Market-changing events may occur that bots are not programmed to handle. Regular monitoring and risk management are vital when using trading bots. – Anthony Georgiades, Pastel Network
Be aware of all possible trade variables. Traders must be cognizant of all situation variations that may arise in trade, such as false breakouts. Additionally, most trading indicators are not exact and can confuse a bot that is not well-programmed. Irrespective of using bots, traders should consistently oversee their trades. – Abhishek Singh, Acknoledger
Examine the influence of AI. Artificial Intelligence has revolutionized trading bots. Previously, a bot's limitations would have included over-optimization, the inability to handle current events, and the absence of human intuition. AI has now augmented trading bots with the necessary "human element". However, problems related to programming still stand. – Sheraz Ahmed, STORM Partners
Understand how bots process data. Most trading bots implement Wyckoff chart analysis techniques for technical assessment. But, if an unforeseen event affects the price, a seemingly "sure bull pattern" might reverse. Always supervise your trades. – Zain Jaffer, Zain Ventures
Do not miss swing-trading opportunities. Trading bots efficiently remove emotions from trading but they lack reactive decision-making capabilities. Even though you can program stop-loss orders and profit-taking targets, abrupt market swings often provide human traders a chance to profit with a quick strategy change, a move bots can't make. Always set alerts to ensure you do not miss a swing-trading chance! – Tiago Serôdio, Partisia Blockchain
Keep in mind the role of sentiment in crypto market. A lesser-known drawback of trading bots is their inability to gauge market sentiment or adjust to market shifts. They lack the ability to "sense" the mood of the highly speculative and emotionally charged crypto markets. They may overlook market sentiment expressed on social media, news events, and regulatory changes which can substantially affect Bitcoin's price. – Arvin Khamseh, SOLDOUT NFTs
This article was made available through the Cointelegraph Innovation Circle, a curated group of seasoned executives and experts in the blockchain technology industry who are shaping the future through connections, collaboration, and thought leadership. The opinions voiced do not necessarily echo those of Cointelegraph.
Published At
9/26/2023 4:00:00 PM
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