The continuous advancement of the world of cryptocurrencies has made its popularity grow considerably, since it has allowed the creation of new cryptocurrencies, as well as an increase in exchange and trading platforms for cryptocurrencies.
Innovation in the world of cryptocurrencies has also made automated trading possible. Automated trading platforms are becoming more common in the market. Therefore, before you start with an automated trading system, you will need to know what it is and how it works, in order to know if this type of trading is the best for you or not.
It is important to emphasize that what helps the most to achieve the success of your investment is your knowledge of how it works; therefore, you should never make an investment if you do not know what it is or understand how it works.
In this article we will give you more information about automated trading and the possibility of obtaining profitability. There are also platforms like the Bitcoin Profit app where you can sign up for free and learn in depth how this type of trading works.
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What is an automated trading platform?
Automated trading platforms aim to make trades executed based on rules and parameters set by the user. It is an algorithmic and mechanical trading system that, once you have established the entry and exit of your operations in the program, will execute them without the need for you to be present.
This provides great trading opportunities as the algorithm works for you. At the same time it removes all emotional biases as all trades will be data driven.
Although it is true, it has the disadvantage that the investor’s intuition is not used, something very important when carrying out operations.
Advantages of using automated trading platforms
We are going to discuss some of the most important advantages of this type of trading.
rational operational decision
All your operations are based on the data obtained by the platform system and the rules you have established; In this way, all your trading positions will be rational, without emotional factors, such as the fear of failure.
Therefore, if you are a person who is easily swayed by emotions and tends to trade excessively, opting for automated trading can be a good alternative.
Backtesting is possible and automatic with automated trading. It should be noted that backtesting is not automatic when performing manual operations.
Backtesting is the automated trading system that unifies your established trading rules and cryptocurrency market data so that trades executed are as accurate as possible.
Therefore, it is important that you define very well the rules that you are going to introduce, since they play a fundamental role in your investments. Backtesting allows you to first check if your established rules will work in the market by first testing them on historical market data. Thus, you can easily assess whether a trading position is working before risking your money on a particular trade.
We cannot deny the fact that computers are faster than humans. They respond faster and better when there are sudden changes in the values of the cryptocurrency market.
They can automatically evaluate this market data and make trading decisions based on your rules. This allows you to take full advantage of market fluctuations. Thus, once your established rules are met, the computer software can automatically execute trades that meet your personal investment preferences.