Cryptocurrency as we know is defined as a digital currency that serves as a medium of exchange especially among online users, they are also decentralized. Cryptocurrency is generated by the creation of blocks by action of mining through cloud mining or hardware mining. We have many cryptocurrencies like Bitcoin, Ethereum, bitcoin cash, stellar lumen and the rest. These currencies serve as not only a medium of exchange but also generation of wealth and storage of money digitally.
Trading is the exchange of goods and services for money between a buyer and a seller. In terms of Cryptocurrency it is the selling of a cryptocurrency for a currency, selling a currency for cryptocurrency or buying cryptocurrency for currency and buying currency for cryptocurrency.
Trading cryptocurrency can be done in two ways one is by a trader and the other is using a bot. The trader studies the market, looks for a good entry price and buy or sell on a trading platform, then wins or loses. The other way to trade is using a trading bot. This method of trade is an automatic way of trading, the trader sets specification for the bot and the bot takes trade automatically depending on the bot intelligence of the market.
Trading by one’s self is considered strenuous. You need to study the market, sit down and stare at your computer or phone for hours before taking a trade and after you still end up losing money. The idea of bot trading came up why not write a code for a bot to take trade instead of wasting time and losing.
Bots as we know are not human, so they are not affected by emotions, they trade specifically as far as you don’t stop them. Bot trading have proved reliable and efficient in some ways, there are many adverts online about different bot that can make profit. Yes, there are bots that make profit but for a bot to make profit it depends on the user specifications.
Bots can make profit when the market is stable, when the market is clear things are not complicated for the bot. Cryptocurrency with its high rate of volatility and unclarity could twist a bot intelligence. A bot only knows what has happened and what is happening and does not know what will happen so when there is a crisis the bot becomes useless.
An instance is the Coronavirus, taking Bitcoin for example, it currently witnessed a sharp downside from over $8000 per BTC to $5000 per BTC. As human, you know the virus can affect the market so the best thing to do is not to trade since you aren’t an expert, but if you are an expert you would have predicted the fall. A bot doesn’t know the situation of the world, it only knows that the market went down this does not stop the bot from trading. Bot are always specific so when their trades doesn’t hit their target they don’t close and when a market turmoil is about to occur it could in reverse way in most cases before taking its exact form. This could lead to a bad loss as the bot doesn’t know that there is an economic crisis going on.
Cryptocurrency bot trading is sometimes profitable but so as not to lose money while using it learn not to make it active every time.