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What are crypto trading bots ? How does it work?

Crypto Trading bots

The cryptocurrency market will surpass USD 5190.62 million by 2026 at 30% CAGR. Even with this promising rise it still is a volatile market in the short and medium-term. Unlike Sensex trading, cryptocurrency trading happens 24×7 and currency prices can vary between different markets in the world, so paying constant attention to it can be a daunting task for investors. This is precisely why many traders are now turning to crypto trading bots to invest in the crypto market and take advantage of the market volatility.

The Crypto trading market requires keeping a consistent tab on market statistics and then investing in currencies that can give the best returns. This is where bots come in. Crypto trading bots are a set of programs that can automate cryptocurrency trading by automating the analysis and interpretation of market statistics, gathering market data, calculating market risk, and executing the buying or selling of cryptocurrency assets. Crypto trading bots can help save time and effort for traders.

Type of Crypto Trading Bots 

There are many Crypto trading bots available in the market. 

  • Crypto trading bot APIs – These are APIs that work seamlessly with an existing exchange. A bot like Pionex, Cryptohopper, Bitsgap, and Coinrule are some of the good ones in this space.
  • Decentralized platforms – These platforms enable trading outside of the traditional platforms with blockchain technology. Platforms like openDAX, OpenFinex, etc are good places to look for it.
  • Arbitrage crypto trading bot – This enables traders to examine prices across cryptocurrency exchanges to take advantage of price variations. 

Most crypto trading bots have these key components:

  • Market Data Analysis to save, interpret and make buying and selling decisions. These bots allow investors to customize data and get refined results.
  • Market Risk Prediction to use market data and calculate the potential market risk and therefore, decide how much to invest or trade.
  • Buying or Selling of bots using APIs and strategically deciding how much cryptocurrencies should be bought or sold.

Advantages of Crypto Trading Bots

Investing via crypto trading bots give investors many advantages like: 

  • Power of data – A human trader can process only a limited amount of data while making trading decisions. Crypto trading bots on the other hand can process huge amounts of data, interpret it, and derive strategic insights.
  • Efficient trading – Crypto trading bots save both effort and time for investors and make trading much more efficient than human trading.
  • Strategic decision making – Crypto trading bots make decisions on data, therefore, they make unbiased decisions. This can be extremely useful for investors, especially for beginners.
  • Speed of execution – Taking advantage of the VUCCA market of the cryptocurrencies, speed to completion can mean all the differences between profitability and loss
  • DeFi [Flash Loans] – Quick access to finance in a decentralized fashion helps with big bets without the need for a huge investment up front.

Crypto trading bots along with some level of human acumen can be extremely efficient for investors by helping them use the power of data, get strategic insights, and execute investment automatically. However, as an investor, it will be critical to understanding the nuances of the cryptocurrency market before investing whether via a crypto trading bot or manually. 

With Zebpay, one of the best cryptocurrency exchanges, you can easily buy various types of digital currencies across 162 countries. Instantly buy and sell cryptocurrencies and start your trading journey with Zebpay today.

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