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What is the mechanism behind automated trading? Well, it’s basically a trading done for the user by some algorithm or trading bot. When a trading bot buys crypto, it automatically calculates the Take Profit level, according to the exchange commission and the specific features of a certain cryptocurrency. There are a number of different bots on the market and they use different strategies to obtain results.
One of the best practices out there is averaging. We have already talked about it in our posts, so let’s just briefly explain how it functions. Automated bot buys a crypto asset and evaluates a price it has to reach for the bot to sell it. As soon as its price is reached, the algorithm sells the asset and opens a new transaction. If a market doesn't achieve an indicated price and the asset is getting cheaper instead, the algorithm buys the same cryptocurrency again making so called «averaging». After averaging this asset can be sold at lower price still making profit since its price was averaged between the initial price of purchase and the price of the second transaction.
Automated bots use a variety of strategies and tools to maximize the profit and provide a service that makes money on user’s behalf while the user himself isn’t doing anything. That’s a cool feature, isn’t it? The only worry people have here is security. Am I doing a right thing giving some bot the access to my money? Are they gonna be on the exchange the next day? Will the bot trade correctly, not making me lose money in some risky transactions?
Those are the very essential questions a trader should be asking before starting with any automated trading service. The good news are – there are good options out there, it’s just a question of trial and error, but if you are determined to find a right automated trading service for you, you will.
Trade smart.
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