Trading with bitcoin and other digital currencies can be a fascinatingly lucrative business. It is definitely not an easy one, however. Staying on the profitable side is a great challenge, so it is not surprising that many people are immediately tempted by the idea of purchasing an automated trading program or a trading robot, as they are often called.
What exactly is that and how does it make life easier for cryptocurrency traders? Are machines better than humans at sensing, predicting and taking advantage of digital money trends and fluctuations? Let’s take a closer look and find out.
What Is A Trading Robot?
As the name itself conveys, an online trading robot is a software which places trades on your behalf. Bear in mind that it is not the same as a signal service, where you are merely sent information via e-mail or SMS and it is up to you to decide whether or not to act upon it.
The trading robot is completely automated. It not only sends signals but also performs the trade on your behalf. That means that you do not need to be at your computer in order to trade at all. You can simply go about your daily business. You can be at home or at the beach and trade at the same time. The robot will do all the hard work for you while you are busy doing something else.
Of course, if things were that simple, everyone involved in cryptocurrency would be a millionaire, right? Well, just like no signal service is perfect, no robot is infallible, either. So, for long-term success, you need to count on something more than a robot in order to make money. They can be very useful, true, but don’t expect them to be the sole answer to resolving all your problems. What an online trading robot can be is a valuable tool in your trading ventures, as long as you know how to make use of its advantages and escape the disadvantages. Let’s take a look at both the human factor and the machine, and see their individual pros and cons when it comes to transactions on the digital money market.
Advantages Of Online Trading Robots
The greatest advantage of online bots is the fact that you do not have to be in front of the computer as transactions are taking place. This is really huge, irrespective of whether you are lazy or simply have your plate full. The bonus here is the fact that a machine has no feelings, priorities or obligations. It never gets tired and is 100 percent committed to the task at hand.
Talking about feelings, it is also worth mentioning that excessive fear, confidence or hesitation can be really destructive when you are dealing with binary options. The lack of emotions in the robot means that it will always take the fastest, most reasonable and timely decision, maximizing your profits by submitting a trade in the exact moment when you can make the most of it. If you are curious to read some more theories along those lines, check this out.
Another unquestionable advantage is the depth and breadth of information the machine can encompass, process, analyze and handle at any given time. The human mind can only focus on a few assets or timeframes, whereas a robot will be able to work with currencies, stocks, indices and all sorts of commodities, selecting the most suitable move every single time.
Disadvantages Of Online Trading Robots
Even though a robot might be designed to work great under the current market conditions, a major change might result in it trading poorly, unless the appropriate modifications are introduced in order to make sure that smooth and profitable operation continues to take place.
That being said, in order to get the best out of your automated trading software, it needs to be updated to reflect market fluctuations resulting from trends that a machine will not be able to sense and take into account on its own. This is actually the greatest shortcoming a robot has, the fact that it is unable to operate from intuition, from an expected outcome you would otherwise foresee by observing financial events and other market phenomena. It might be great at analyzing a chunk of data you feed it and take appropriate action in split seconds to ensure you make the most profit from a signal, but it will remain inefficient where subtle changes in crypto climate require human judgment for best results.
What Are Humans Better At?
As humans, our advantage over machines is that we actually know what we are doing and why we are doing it. If you do your own trading, you definitely know the ins and outs of digital currency, cryptocurrency regulations and the associated market trends. You know what works, how it works and, most importantly, why it works. And knowledge is power. Nobody could argue with that.
If your system happens to stop working, you will be able to spot that and take measures right away. At the same time, a robot will keep generating unprofitable trades indefinitely, or until human intervention takes place. Troubleshooting skills are in the human realm, they are something you just can’t expect a machine to be able to do.
The longer you trade on the markets, the more your expertise grows, turning you into a pro. You can genuinely read charts and fluctuations, and your intuition works impeccably when you notice a new pattern. The potential for growth and development is a great advantage humans have over machines.
Shortcomings Of Being Human
One thing we can never beat robots at is speed. Humans will never be as fast as software at calculations and financial operations. It definitely takes time to spot an opportunity that requires action, and by the time you spot it, the opportunity might already be gone. Or the technological time you need to set up your order might slow you down and result in executing it at a different price from the one you expected.
Humans also have a limited amount of time, energy and resources to spend on trading. Giving it your undivided attention is simply impossible because we all need to rest and attend to other obligations. We also have a narrower focus, since it’s highly unlikely to encompass all assets and timeframes a machine will process with ease. Being tired or sick is definitely going to impact performance as well.
Emotions are yet another setback. Emotional decision-making is a shortcoming that can cost us dearly. When the judgment is clouded by fear, impatience, overconfidence, frustration or anger, intelligent and reasonable actions are very difficult to maintain. And that’s when big mistakes happen.
Which One Should Prevail?
It is obvious that the disadvantages of robots are human advantages and vice-versa. In short, a robot is a powerful machine which has capabilities we lack but people have qualities a robot will never be able to achieve. So what is the logical conclusion?
A smart practice would be to combine the best of both worlds. Do your best to become an expert in the cryptocurrency market (If you are a newbie, a good beginner guide is https://www.forbes.com/sites/cbovaird/2017/11/21/top-5-tips-for-new-bitcoin-investors/#4e3858051e80) and at the same time back that up with the advantages of an online trading tool. It can definitely help you save time, do the trading on your behalf while you are at work or attending to other obligations, and spot signals you would have otherwise missed.
If you spend some time on research, preliminary testing and measures to pick out the appropriate auto trading software, you might be able to successfully supplement your own expertise with the added benefit of artificial intelligence. In this way, instead of competing against trading bots, you can recruit them to work for you.