What to Know About Automated Crypto Trading

This is a special addition to Quantify Crypto, Daniel Barry has no affiliation with Quantify Crypto.  Although we share the same last name, he is not a relative of the co-founders.  - J. Barry CEO Quantify Crypto

Thanks to the rapid digital adoption of 2020, more investors are gaining access to this previously niche asset. A Master Your Money Invest & Thrive Survey reveals that, in fact, 34% of new investors said an awareness of new investment apps influenced them to begin investing.

However, while stay-at-home orders may have made it easier to monitor your crypto assets, the resumption of in-person work and school may affect many traders’ market activity. Enter the convenience that is automated trading.

What is automated trading?

Automated trading is algorithm-powered technology that streamlines the buying, monitoring, and selling of your crypto assets with little (to zero) human intervention. What’s more, unlike traditional trading that requires redundant approvals and procedures to move assets, automated trading uses a pre-determined strategy that can be executed autonomously. This is especially beneficial in crypto trading given the volatility of even the top cryptocurrencies today.

Automated crypto tools you should know about

There are many options for automated trading, but these generally involve platforms and bots. Determining the right automated tool for you depends on very personal factors—capital, cryptocurrency preference, and risk tolerance, to name a few. There are a multitude of guides online (like this one!) but most platforms will also have a customer service hotline that you can easily reach for more information. Here are a few of the most common types of automated tools you’ll likely hear more about:

Robo-advisors

When you start trading, in general, you will have to open a brokerage account Maximizing the growth of this account is usually handled by a financial advisor. But more recently, a much more affordable management alternative has emerged—the robo-advisor. This digital feature uses a personalized algorithm determined by answers you supplied in regard to your risk tolerance, age, income, employment, and financial ambitions. Robo-advisors spread out your money across various investments to lower risk and increase the chances of returns.

Smart contracts

Some of the most secure automated cryptocurrency is protected by smart contracts on blockchain’s ledger technology. Smart contracts are autonomously functioning code that executes trades which are supported by most cryptocurrencies like Ether. Smart contracts are key features in decentralized crypto trading platforms since they provide a high level of agility. Notably, utilizing a smart contract allows you to redeem a portion of your capital funds via cryptocurrency tokens.

Momentum algorithms

An AI driven trend indicator , a momentum algorithm accurately predicts bullish or bearish movements in crypto. Prices can fluctuate erratically in a short span of time, and this can often intimidate or confuse investors. With a momentum algorithm, you can gain a better understanding of a token’s stability. This in turn, can guide investors on whether or not they should enter, hold, or exit a crypto investment.

The pros and cons of automation

Pros

+ Trading is done quicker and timelier: Cryptocurrency prices can move as much as 30% in less than a day. Missing these dips or spikes can be opportunities lost for an investor. But since automated trading depends only on software and the Internet, they are able to react as soon as the shift occurs.

+ Has access to a much-wider wealth of data: Because bots are virtually connected to massive data traffic at all times, they are privy to new updates almost immediately. They are also able to consume and translate data at a speed impossible for humans. Thus, automated trading platforms can make sound decisions with more references.

Cons

- Still susceptible to hacking and programming errors: Although cybersecurity is becoming more sophisticated daily, so are hackers. Just this year, there has been a 158% increase in ransomware in North America. Cybersecurity vulnerabilities have even led to dramatic digital attacks like in the Colonial Pipeline. The 2021 Hacker Report also indicates that there has been a 694% spike in API hacking. Though blockchain is virtually impenetrable, the various other online platforms are not invulnerable.

- Can be emotionless to a fault: Using your heart to invest may not be wise but doing so without your gut can be just as tricky. Automated trading picks up on trends and patterns, but they are limited by the algorithm they function on. Human traders still benefit from offline information and the ability to psychologize societal cues.

As more financial institutions and countries begin to acknowledge cryptocurrency; automated trading may very well be the next step to making crypto a part of everyone’s investment portfolio.

Quantify Crypto provides real time technical analysis to support your trading decisions. We have the fastest live price feed of all cryptocurrency informational platform. Our proprietary trend algorithm calculates the predicted direction of future price moves. It is specifically tailored for the cryptocurrency market. Our state-of-the-art displays are designed to provide maximum amount of significant data on a single screen.