The modern approach to trading is full of interesting ideas about the analysis and estimating value, but many people do not think too much about actual applicable tools that can dramatically improve some aspects of your investment strategy. Contemporary cryptocurrency trading software is often overlooked by beginners and even veterans despite the apparent advantages of using it.
It is possible to streamline your trading routines, reduce idle time, and optimize profitability without compromising the risk-to-reward ratio in your portfolio. It does take some practice to master the full spectrum of instruments offered by advanced automated trading platforms, but the end result is quite impressive.
The vast majority of traders rely on a variety of highly specialized tools when they do the analysis of price action. Some retail traders and huge investors prefer working with expert advisors to improve the outcomes of their market positions in the short and long term. Interestingly enough, not many people use any tools to automate fine-tuned strategies that they devise with or without help from consultants.
You may have the best strategy out there and still make money, but the performance of this trading system will still fall behind compared to what it could have been if you used trading software.
The first attempts to automate investment routines happened at the end of the 1970s when some economists toyed with the idea of introducing mathematical algorithms into investing. Initial ideas were quite limited in scope and lacked the necessary equipment or approaches to algorithm coding. In the 1990s, the Wall Street companies started using robots to outpace the market.
These were crudely made algorithms that relied on imperfect internet connections and slow computers. Nevertheless, these robots were capable of outperforming the market and human traders.
The latest trading technology is way more sophisticated. Modern companies like WunderTrading use the most powerful cloud computing services and deploy advanced script-writing tools to their platform allowing users to create incredibly complicated bots. You don’t need to introduce such complexity into your strategy, but the ability to do it is more important than many think.
Contemporary automation in the crypto world works with just three core components:
1. An analytical platform that produces signals (users may generate them manually if they want).
2. An automation service itself where signals are received, processed and reacted to.
3. An exchange where bots place market orders and send other commands.
The most popular analytical platform in the industry is TradingView by a large margin.
A trading terminal is a special interface through which users can interact with the market using the services of brokers or exchanges. In the crypto industry, we have a wide range of centralized and decentralized exchanges that have API and can be integrated with third-party software providers such as TradingView or WunderTrading.
It is hugely important for retail traders to use technical analysis tools when contemplating future market decisions. TradingView has a huge catalog of various instruments that will help you create a reliable strategy using time-tested and community-chosen systems:
•You can use graphical tools like Fibonacci lines, drawing, fractals, and more. Many analysts rely heavily on projections that can be easily visualized using these tools. While such extrapolations may not be the most reliable source of signals. They help traders orient themselves in the market.
•Deploy technical indicators that provide a better picture of the current market situation. Price action and volume can tell you a lot about the trend of the price, the mood of the trading community, and more. Indicators use the market data to present a more comprehensive view of the situation.
•Use sophisticated trading systems created by power users and tested by community members. You can use these and make them even better with cryptocurrency trading software that can run it around the clock and produce consistent results.
Platforms like TradingView also store a massive amount of historical data which can be extremely useful when you are trying to integrate trading automation tools in your investment practices. You need to check how well it works when applied to the real market. Platforms like WunderTrading have backtesting capabilities that allow users to look at the historical performance of strategies and specific settings using the data from TradingView.
The setup process is quite easy and requires users to go through just a couple of steps:
1. Register at WunderTrading if you don’t have an account.
2. Connect your favorite centralized exchange platform.
3. Go to TradingView and deploy a strategy that you like.
4. On WunderTrading, go to “My Bots” and start creating a new one.
5. Use signals from TradingView in your bot (use the tutorial on WunderTrading).
6. Launch the bot.
Note that you need to use some basic portfolio management tricks to reduce the exposure of your capital to various risks associated with trading:
•Consider creating a new account for an exchange that will be explicitly dedicated to trading automation. Do not put more than 25% of your total portfolio in it.
•Use all security features offered by the exchange and the automation platform. Make sure to enable two-factor authentication and other security options.
•Use “take profit” and “stop loss” settings for trading bots according to your risk tolerance level and do not allow bots to work without any limitations.
The simplest answer to the question is “those strategies that work within the 24-hour cycle”. While you can automate any strategy that uses only technical analysis to identify good moments to enter the market, day trading and scalping techniques will work the best for three key reasons:
1. Bots do not need sleep or rest. It means that they can run 24/7 which is perfect for the cryptocurrency market that also works around the clock without any pauses or days off.
2. Bots can make decisions decisively. Scalping and day trading techniques must be executed confidently to prevent losses of potential profits. A robot does not hesitate to second-guess itself. It just acts.
3. The speed of contemporary bots is unmatched by humans. The lightning-fast reaction and instant order execution are two things that reduce the time between the appearance of a signal and order creation to a fraction of a second.
Retail traders may use automation for all sorts of purposes. For example, you can employ DCA bots to slowly increase the size of your portfolio. Some investors like using safer strategies like automated arbitrage trading or staking to hedge against other risks associated with investments in coins with huge potential but weak current market presence.
Whether you have a powerful day trading strategy or a sophisticated approach to analyzing the price action to take on long-duration market positions, it is possible to fully automate them and improve the efficiency of trading.
Contemporary trading automation methods are quite impressive in many ways and can make your portfolio much more resilient to various risks while improving the profitability of reliable strategies that you already employ. It is never too late to start using these powerful tools in your investment system and capitalize on the advancements in multiple domains such as cloud computing, automation technology, and social elements in technical analysis.