Pros and Cons of Using Crypto Trading Bots

Crypto Trading Bot
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Automated trading is not new. Even before the advent of crypto trading, the stock market had brave and brilliant traders who made their fortunes using algorithms. Nevertheless, due to the robustness of the crypto market and its high volatility, automated trading has assumed a newer and fresher form. It is on this note that crypto trading bots are a real thing.

For crypto traders who rely on trading bots to buy and sell coins and assets, bot trading is awesome. It not only saves time but also lends them a semi-omnipresence in the online trading market. For crypto traders who prefer to rely on their own guts and smarts, trading bots are only a futile luxury and convenience.

So everybody has something to say about crypto trading bots and their usefulness. This is because there are both pros and cons to the use of these bots. It is because some traders know these pros and cons that they decide to use—or decide against using—crypto bots for trading.

We developed this article to show some of the pros and cons of using crypto trading bots. Our aim is to give you a rationale pedestal for decision-making regarding the use of crypto trading bots. We expect that after you have read the article, to use or not to use crypto trading bots would no longer be the question for you.

Pros of Using Crypto Trading Bots

There are many advantages to using trading bots. In this section, we touch on 6 such advantages. These are as follows.

1- Emotionless Trading

The foremost advantage to using crypto trading bots is that your trading game becomes devoid of emotions. Emotions, as you well know, clouds judgment. Clouded judgment is not useful for profitable trading since it gets in the way of logical decision-making. And except you are willing to throw out your heart and take on that of Sophia The Robot, you are better off using trading bots.

Trading bots are computer software. They are algorithms that are rule-based and they are digital. They will not cry over a loss or pump their fists into the air in excitement. That emotional element is missing, so clouded judgment is not a thing with them. Thus, they are able to trade without emotions, using tested strategies for buying and selling cryptos.

2- Disciplined Trading

Disciplined trading is an extension of the first point: emotionless trading. When you trade using your guts, you tend to vacillate between options. You rely on what you know which is very limited. And your decisions are not often backed by any real principle other than broad strategies that offer minimal value for profitable trading.

In such instances, you need discipline to trade cryptos. Remember that price volatility is a common thing, so discipline takes you from green trader status to the status of an expert trader. This is where crypto trading bots excel. As long as you give them instructions to follow, they don’t deviate. In fact, this rule-based trading style is one of the reasons some crypto traders use bots in place of guts.

Imagine using BitQuant, a novel trading bot, for instance. The bot’s rule-based approach to trading will not only save you from erroneous decision-making due to emotional interferences. It will also help you trade consistently so you can make up to 20% guaranteed monthly profits on your crypto investments. Unless you are a trading bot yourself, this level of consistent returns is impossible with gut trading.

3- Easy Backtesting

Backtesting is one of the 4 major components of trading bots—the others being strategy implementation, execution, and job scheduling. This component ensures that the bot uses historical data to test the ups and downs in the price of a particular crypto. This essentially grants you a playing ground within which you can experiment with the crypto market in general and cryptos in particular.

This is only one of the applications of backtesting as a component of trading bots. Nevertheless, you can see the advantage this gives you. Of course, if you have the time and mental fortitude, you can also get a pen and sheets of paper to carry out these tests. However, the trading bots are likely to give you better results, not to mention a simple and relatable interface. So, yes, trading bots allow you to backtest without stress.

4- Diversification and Flexibility

Going further down the lane of backtesting, crypto trading bots offer you a variety of technical capabilities. Some of these capabilities (Naïve Bayes, for example) are mathematical and statistical in nature. Others like AI (artificial intelligence) are largely computational. However, the implementation of these capabilities brings about diversity and flexibility.

The diversity we refer to is the same as an extensive trading scope. With crypto trading bots, you will be able to monitor more markets, coins, and prices. Moreover, flexibility means that you will be better furnished with information for better decision-making.

So, crypto trading bots will not only open you up to a brave new world of cryptos that are inaccessible to the sixth-sense trader. No, they will also set you up for success by positioning your trading game at opportune points.

5- Transparency

One of the biggest pros of using crypto trading bots is that you will be able to better monitor your trading. As these trading bots are digital, they automatically keep records. The ones that are driven by AI, especially, can even learn from these records. This simply means that your trading becomes transparent.

For prospective investors, a trader’s reputation is everything. And what is a good reputation in crypto trading without transparency? So, trading cryptos using bots gives you a clear tracking record.

6- Ease of Trading and Semi-Omnipresence

Crypto bot trading just simplifies trading. You don’t have to register for crypto boot camps. Trading bots are fitted with the basics of trading. You only need to ‘plug in’ instructions and strategies and they’ll be up and running.

Moreover, you can rest your eyes and mind when you use trading bots. No keeping vigil because you think the price of a coin might shoot up and fall during the night. Trading bots lend you a semi-omnipresence in the trading market and enable you to trade without trading.

These are some of the reasons that many crypto traders use trading bots.

Cons of Crypto Trading Bots

Crypto trading bots are not perfect. There are several disadvantages to using them. Some of the most common of these disadvantages are highlighted as follows:

1- Possibility of Technical Failure

Crypto trading bots are digital, so they are also subject to digital shortcomings. The most universal of these shortcomings is technical failure. Since the bots are driven by algorithms developed by error-liable human minds, they can fail. And if they fail without your knowledge, you could lose your crypto investments.

2- High Requirements for Technical Supervision

Although automation is the core offering of trading bots, this does not mean that they do not require supervision. In fact, some of these bots can only be reconfigured by software developers. This is another reason why bots like BitQuant with perpetually accessible customer service are highly prized in the crypto trading community. So, if you are a beginner or someone without useful experience with trading bots, you might end up at a loss when you need to fine-tune your trading bots.

3- High Odds of Distortion from Over-Optimization

Some of the offerings of trading bots can be over-optimized. This means that the projections made by these bots can be belabored to the point of distortion. In such instances, the evaluations of the bots regarding the crypto market are far from what is obtainable. Thus, there is still a risk of trading failure and loss when you use trading bots. Of course, this is where choosing the best crypto trading bot is a big deal.

4- Too Many Options

There are so many crypto trading bots. One might even say that there are as many crypto trading bots as there are cryptos and crypto exchanges put together. This variety is both good and bad. It is good because you can always get something to fit your trading goals. It is bad because the presence of alternatives makes it difficult to come to reasonable conclusions. Worse of all, it is not easy comparing trading bots. You can only rely on what the developer says and what you get from experience.

5- Possible Indecision in Emergency Situations

Lastly, crypto trading bots cannot make spontaneous trading decisions. This, once again, is both good and bad. You can easily lose great opportunities to plug into hot deals in the crypto market. In the same way, your crypto trading bot can only operate in one direction, it can stop moving totally on some rare occasions. What, for example, will an arbitrage bot do when there are no price differences across reputable exchanges? It will stop trading. That’s a minus.

So, the choice of whether to use bots for crypto trading rests with you. Generally, there are incredible traders that use them and others that don’t. In deciding which of these categories you want to belong to, take your time to consider your options. If your trading goals can be met with crypto trading bots, use them. If not, don’t.


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