Pros and Cons
Some people like to automate processes such as Bitcoin trading and focus on other things, while others enjoy doing everything manually, assuming complete control along the way.
Which approach is better? Let’s examine both of them and compare them. Read on!
How is cryptocurrency trading automated?
Many Bitcoin traders consider automation their best friend. They use various tools inside and outside of cryptocurrency exchanges in order to improve their trading and profit from these actions.
The most popular “tools” are called cryptocurrency trading bots, and they act based on certain predefined rules. What they do is observe prices of Bitcoin or other cryptocurrencies that you are trading, and inform you about changes. Some of them can even place orders on your behalf, completely automating your trading experience.
One of the popular online cryptocurrency exchanges is CEX.IO. It is available around the world and offers some of the best fees for Bitcoin traders. Just like other great exchanges, CEX.IO offers trading automation. People who are registered at this exchange will be able to improve their trading efficiency and speed up various processes related to buying and selling Bitcoin. You can facilitate your trading on the platform using their API solutions. With them, you can customize your experience and integrate trading tools like bots. Here is how you can activate this feature.
Why are cryptocurrency bots good?
Cryptocurrency bots are essentially machines, so human error is not an option there. When we scan various figures and take manual action, there is always a possibility that we are going to do something wrong.
Moreover, many traders act based on their emotions. We all get carried away sometimes and make somewhat illogical decisions. Only when emotions subside we can see that we have made a mistake. This doesn’t happen with cryptocurrency bots. They simply act on what’s the best possible option at every moment, being deprived of the ability to feel emotion.
One of the best advantages of cryptocurrency bots is that they are efficient. Automated systems can process much more information. It would take hours for us to do what bots can do in seconds. We also cannot perform several tasks at the same time, so cryptocurrency bots take over and do everything at the same time.
Finally, bots work 24/7. They monitor the prices and the market, process changes, place orders, and more. Nothing can remain unnoticed when you use cryptocurrency bots to automate your Bitcoin trading.
Bots come with certain disadvantages
First of all, bots are not that easy to configure and use. Therefore, new traders will not be able to understand how to use them and how to get the most of them. If you are new to Bitcoin trading, using them for automating your experience is not really a good idea. It’s just like trying to play a very difficult tune on the piano, while you have never played piano in your entire life. In other words, you need to practice and understand how everything works before you can use bots.
Bots may be perfect in what they do, but they also need some monitoring as some of their actions may not make sense. The lack of emotion is actually a bad thing sometimes, as they would fail to see the most obvious course of action, blinded by sheer logic.
Finally, bots have access to your cryptocurrencies. They basically handle your money. If you use a bot that is not well protected, there is a risk that hackers can compromise it, penetrate exchanges and steal your coins. Some things you can do to prevent this is to never give anyone your API keys. Also, make sure that automated withdrawals are switched off, and that you know how to make the most out of bots in a protection-wise manner.
Is manual Bitcoin trading a better option?
First of all, manual Bitcoin trading should never be excluded. Even when you use bots, a good deal of trading must be conducted manually. After all, you need to supervise bots and jump in whenever you feel something should be done.
“Feel” is perhaps the keyword we are looking for here. Bringing some emotion to trading is not always a bad thing, and following your gut can bring positive results. After all, no matter how perfect your bots are, you need to understand that the element of luck is always present. Therefore, if something tells you that you should take a risk, perhaps you really need to risk — that’s the beauty of cryptocurrency trading, as the market is pretty unpredictable.
Moreover, trading manually is easier if you are a beginner. New cryptocurrency traders need to explore every possibility and master their skills by venturing smaller amounts one day at a time. If you are persistent and dedicated, you will gain enough knowledge about the activity, and only then you can think about automation.
Finally, manual traders don’t risk being hacked as they get to pull strings and manually decide on every action they take.
Manual trading has some downsides as well
Manual traders cannot achieve as much as bots, and that’s probably the only major disadvantage that brings dozens of additional obstacles with it. We are bound by our cognitive capabilities, and every our action takes time. Bots can do it all at the same time and save us a lot of time and energy. Without the assistance of automated systems, we are trotting behind traders who use cryptocurrency bots and other tools that help them improve their skills.
If you are new to the world of Bitcoin trading, you shouldn’t consider using automated systems in order to get help. These require that you are not only tech-savvy but also know the art of trading well. Only when you master it, you will be able to include bots that can do all the ‘dirty work’ for you.
However, the real journey begins once your trading is automated. It means that you are getting serious about it and need to supervise your bots, analyze data that they harvest, and even jump in when needed in order to make the right choice.
In the end, you need to remember that cryptocurrency trading is never a safe bet and that no automated systems could guarantee a 100% success.