Algorithmic Trading: The Strategic Approach To Crypto Trading

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Crypto trading has been gaining worldwide attention since 2017 when the crypto market reached its peak. The number of active crypto traders has been steadily increasing due to the various benefits - quick transactions, huge profits, privacy, and borderless transactions - crypto trading offers.


However, one of the major challenges crypto traders face is a definitive approach to effective trading and making profits. Unlike stock trading, crypto trading occurs 24 * 7 throughout the year. Various significant factors affect the price of cryptocurrencies, and one has to give proper attention to all these factors to succeed in trading.


Trading has become a passive income source for many worldwide. With companies providing Automated trading bot development services, building a customized algorithmic bot has become easy. 




Algorithmic Trading: Nothing But Automated Trading


Algorithmic trading, also known as algo trading or automated trading, involves trading machines (bots) to buy and sell crypto assets on behalf of a trader. The bots follow a predefined set of rules to place trade orders at the right time.


Algorithmic Trading Strategies

Technical Analysis: Evaluate the market movements, patterns, and inefficiencies using analytical tools to determine the prices. A trader searches for information in order books and charts. And based on the data collected, they can identify the cryptos’ movements and trade effectively.


Market-Making: Market makers buy crypto assets and hold them in their accounts to balance the future sell orders by individual traders or hedge funds. Market makers provide liquidity to the crypto market using this strategy.


RSI: The Relative Strength Index measures the strength of a market trend based on the average number of gains and losses over a period of 14 days. The RSI strategy helps traders identify whether an asset is overbought or oversold.


“Trading bots, powered by algorithmic trading, eliminate the risks associated with digital assets trading that are characterized by high volatility.”


Benefits Of Algorithmic Trading

Convenience

Algorithmic trading helps to eliminate the need to keep an eye on the market all day and night and helps traders avoid spending time manually placing buy and sell orders.


Emotion-less

Algorithmic trading allows crypto traders to eliminate emotions from the trading processes and minimize distractions from the original trading plans.


Speed ​​and Accuracy

Algo trading allows traders to minimize the risks of human errors in market analysis and executing orders. By automating order entries, traders can use algorithms to quickly read information from multiple indicators and complete trades.


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