Pretend you have a piggy bank. You put a piece of money into your piggy bank every time you get some. Now, picture if there was a small robot inside your piggy bank that takes out money buys more coins when their price is low and sells them whenever they are high. So, your piggy bank will be filled quicker! Sounds cool, right? It is a bit similar to what AI crypto trading bots achieve. They are tiny little programs that assist people in trading cryptos so they can earn more profit.
What Are Cryptocurrencies?
Before we go further, what are cryptocurrencies? How Digital Money Became Cryptocurrencies Cryptocurrencies have no physical form, so they exist only online. You can use these to purchase items on the web, or you could hold onto them and keep them in a safe like you would with a unique baseball game card that ideally will one day be worth more money.
The well-known cryptocurrency we know about is Bitcoin without forgetting Ethereum, Litecoin, Ripple etc. Because these digital currencies fluctuate in value regularly and then artificial intelligence trading bots can buy here.
How Do AI Trading Bots Work?
Artificial Intelligence (AI) — AI stands for Artificial Intelligence. It is somewhat like a smart computer that learns and makes decisions on its own. AI(Crypto) Trading Bots are specific lines of codes that will execute buy/sell orders automatically on the behalf of trader when pre-defined conditions like volume, price etc. meet.
These bots keep a very close watch on the market. They do so instantly when they see an opportunity to go long or short because the trade is gone in seconds, and there are no humans clicking buttons on a tick-by-tick activity like this.
A picture of playing a video game, where you are trying to collect all the coins possible. Maybe you need to jump over obstacles, or dodge enemies and grab half a coin with as much agility as possible. So, what if you had a buddy who can play this game for you and they are like really good at it? They would know precisely when to jump, which paths to take and where the coins were at. Which is kind of what an AI trading bot does. It is having a super-smart friend who will guide you to trade and make more money,
Why AI Bots are Trending in Trading Business
This is the reason why AI-based trading bots are getting popular as they can work all day around. While we humans have to sleep and eat (and take a break now and then), these bots can keep an eye on the market day & night. This way they will never miss a good opportunity to trade.
These bots are speedy, too. Trades can be executed in a matter of milliseconds, faster than any human could ever hope to achieve. This speed advantage rates them higher in the world of crypto trading, a place where every second counts.
Advantages of AI-based Crypto Trading Bots
There is a major advantage of utilizing AI trading bots in maintaining risk management and not losing money. It’s tough to trade because prices can move so fast. It is very simple for a person to just make an error or miss a good possibility. ExpensePanda will never be tired or have a bad day as humans do – it is just a bot. This allows it to make data-driven and logic-based decisions, which can be more effective.
The other advantage is their capability to process huge data at a time.§ At the same time, they can analyze the market itself and react to market news as well as other traders’ positions. It gives them a huge advantage over human traders since humans can only concentrate on one thing at the time they operate.
Types of AI Trading Bots
There are several flavours of AI trading bots that people use. Some were devised to follow buy or sell signals for certain trading conditions. For instance, some bots might specialise in small gains from lots of little trades whilst others will bide their time and hold out for larger opportunities.
The bots are also customizable and can be set to trade the way you want. While the others have their in-built tactics which are virtually proven to work.
Are AI Crypto Trading Bots Safe?
Maybe you are thinking: Is it safe to leave the money with a robot? That’s a good question! AI trading bots are no doubt very effective, but not always perfect. It also needs to be said that there is always a risk when trading and even bots are not foolproof. But, a lot of people still think it is worth the prize if you spread your wings and take more than one aspect into account (like choosing good bots for example)
It should be mentioned not all trade bots are the same. There are certainly bots that come from reputable companies and ones which might not be as trustworthy. Make sure to read reviews before delving into a bot so you know that other people have positively received the service.
Future of AI in Crypto Trading
AI trading bots are the future, and as technology advances they will only get better. It would grow even faster, and get smarter and more efficient at finding trades. Experts claim that in a couple of years, over half of trading will be conducted by bots instead of traders.
But it does not mean the end of trading by people. Instead, AI bots will simply be adopted as an assistant to aid traders in their decision-making process. Better put, in the way we use calculators to help figure out the math, traders may seek support from AI trading bots that can execute based on informed strategy ideas.
When to Use an AI Trading Bot?
More: Do your homework if thinking of using an AI trading bot Understand the operation and the strategy of if or how your bot works. It is also a good idea to get started with a lesser sum of cash, and then assess how the bot will do before determining to help yourself assign more resources.
AI trading bots should not be considered as an infallible means of generating income, so it is important to keep that in mind. Market trends are a constantly moving target just like risk is inherent in all trading.
Conclusion
AI crypto trading bots are the mini girl/boy robots that assist you trade cryptocurrencies better. They can work 24/7, are great at making fast decisions and process a lot of data in parallel. Though they are not free from flaws, but have some advantages, especially for those who wish to trade without having to watch the market all the time.
And as the technology improves, these bots are expected to become powerful players in cryptocurrency trading. So whether you are an amateur or professional trader, keep your eyes open on AI bots in trading.