Crypto Trading Algorithms: Complete Overview

Capital Market Advisory

Crypto Trading Algorithms: Complete Overview


Algorithmic crypto trading is automated, emotionless and is able to open and close trades faster than you can say “HODL”.

Thousands of these crypto trading bots are lurking deep in the exchange order books searching for lucrative trading opportunities. They range in complexity from a simple single strategy script to multifaceted and complex trading engines.

They are also becoming much more popular. As the crypto markets get flooded with new entrants, smart traders have to resort to new methods of getting an edge over their competitors.

But, are crypto trading algorithms profitable and can you get involved?

In this post, we will give you everything that you need to know about algorithmic trading.

What is a Trading Algorithm?

Simply put, algorithmic trading is the use of computer programs and systems to trade markets based on predefined strategies in an automated fashion. In the retail markets, they are sometimes referred to as robots or “bots”.

The term could be used to refer to anything from a simple trading script that you developed on your home computer to the multimillion dollar systems that are used by HFT Quant Funds on Wall Street.

There are a number of advantages that these algorithms have over human traders.

The first and most obvious of them is that they are able to run perpetually. When human traders have call it day, these robots can keep running as long as the cryptocurrency markets are open. Given that these markets are open 24/7/365, so can the bots operate.

Another advantage of these trading bots is the speed with which they are able to place the trades. These bots are usually run-on high-performance servers that are able to open and close trades in the blink of an eye.

However, the most important benefit of a algorithm is that it has no emotion.

These systems are governed entirely by code. There is no emotional component when these scripts place their trades. They merely process the numbers and execute the trade irrespective of how you may feel.

Indeed, feelings of fear and greed are often some of the direct causes for large trading losses. A trader will divert from a tried and tested strategy merely because of how they feel.

So bots are clearly an effective tool in a saturated market.

This blog is a shortened version of this article originally published on coinbureau. Read the full article here:

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