This is a well-known fact that one of the scariest things about cryptocurrencies is their volatility, with prices at times fluctuating crazily in a matter of minutes.
Last week, Bitcoin (BTC) broke its previous all-time high of $64,888, hitting $66,974. However, the price of the leading cryptocurrency can dip just as easily.
This unpredictability of cryptocurrencies has served as a deterrent — it has massively precluded people from investing in them. Fortunately, some industry stakeholders, like Bitsgap, have stepped in to simplify the trading process, to encourage newcomers and even make things easier for professional investors.
Let’s take a look at popular trading tools, such as automated trading bots. These bots help you trade swiftly at any hour of the day and save time. This guide aims to help you outline the steps required to set up your Bitsgap crypto trading bots to start generating revenue.
Crypto market volatility
Volatility refers to fluctuations in the price of an asset. The crypto market has been highly volatile since the very beginning.
In December 2020, the price of bitcoin was about $20,000, until it crossed $40,000 the following year. In April 2021, it reached an all-time high of $65,000, but then dipped again. However, it recently surpassed it’s previous all-time high. Similarly, most other cryptocurrencies have behaved in the same manner.
It is speculated that the volatility of cryptocurrencies could be because they are still at infancy stages in comparison to other assets, thrive on speculation, and are strictly decentralized digital assets. Due to cryptocurrencies’ volatile nature, often, investors are not quick enough to react to its fluctuations, which is why bots can be of great help here.
What are trading bots?
Bots are software programs that carry out tasks using artificial intelligence (AI) based on pre-established specifications. They buy and sell cryptocurrencies based on their internal algorithm. Trading bots are automated crypto trading tools that can be set to execute trades without human intervention. Traders use bots to take advantage of the crypto market that runs 24/7, globally.
Automated trading options: how does it work?
We take it that your interest in trading bots is growing already. Do you know what these bots can do? They can calculate potential market risks and even execute orders. Essentially, when it comes to automated trading, three levels are involved.
In the first stage, the bot gathers data like price movements into an algorithm and makes predictions. Using Bitsgap, you could use your API key to connect the Bitsgap account to numerous crypto exchanges in the market. These bots are capable of conducting a worthwhile market analysis.
The second stage involves risk allocation. Here, the bot decides whether to buy or sell or how much investment should be made. These bots are up to the task of balancing the risk exposure.
The third stage is the execution stage. This is the part where the bot makes the trade, and it is capable of being consistent when it comes to securing profits, regardless of the market conditions.
Why do users need trading bots?
There are several advantages attached to using crypto trading bots, including the following:
- A quick reaction. As an investor, you cannot keep your eyes on the market all day long, but that is something the bot was built for. These bots can react swiftly to price changes and make the right decisions.
- It saves your time.
- The bots can make emotionless balanced decisions, unlike humans who can be influenced by their emotions and impulsivity.
- A trading bot is a safe space, as long as the settings and data were input correctly. Investors can participate in crypto trading 24/7, with minimal risks.
- Trading bots are easy to use, they do not require any technical foreknowledge.
- These bots are consistent in making profits, even if these profits are marginal.
- Using bots has its downsides, like everything in the world. Due to crypto volatility, it may be time-consuming and complicated to program trading bots perfectly to deal with the fluctuations.
- Trading bots cannot realize meteoric profits.
- Successful optimization of bots may require deep knowledge of the crypto market.
How to set up a crypto trading bot
Now, let’s get onto how to set up trading bots on Bitsgap, a trading platform developed by a team of experienced traders, security experts, and marketers, whose goal is help traders manage crypto efficiently.
- Create an account on Bitsgap.com.
- Proceed to choose a trading pair. Even if there are no certain indications for the best trading pairs, you can go for something mainstream like BTC/USDT, ETH/USDT, or BTC/ETH. You should note that it is easier to buy or sell cryptocurrency in a liquid market, as there would be a large number of participants.
- Choosing a bot. Three bots are made available, and you should go for the one that adequately suits your needs.
● Classic bot. This bot should be used when you project the market to have positive momentum. This bot buys a static number of coins. Classic bot increases the total amount invested on the rally.
● Sbot. This bot emerged from the Classic bot, however, the difference is in their distribution strategy. This bot can be utilized if you project the price to swing within an horizontal expanse.
● Combo bot. The Combo bot is for futures trading. It is designed for both rising and falling markets.
- Lastly, you should visit the “Knowledge Base” section on the platform to learn the things to consider, before launching a bot, such as the price range, amount of investments to consider, number of grids, grid spacing, among other terms to get familiar with.
Using bots may not be easy, but Bitsgap has gone out of their way to simplify their deployment. You can trade nonstop with Bitsgap trading bots. If you still haven’t decided whether crypto trading bots can earn you more than you do manually, you can always check your Bitsgap bot performance by trying the demo mode or backtest for free, before making investment decisions.