Why is Automation Necessary for Traders?Reading Time: 4 minutes
Cryptocurrency trading operates in a manner like conventional foreign exchange trading. The only difference is that rather than trading with fiat currencies such as the U.S. dollar or the Japanese Yen, you are trading recognized cryptocurrencies such as Bitcoin, Litecoin, Ripple or Ethereum.
Professional traders rely on sound strategies to make profits. For instance, they perform extensive market analysis, draw analytic charts, and only trade when the market conditions are favorable. This is a manageable process for traders who are interested solely in trading through exchanges. However, this laborious, manual process becomes a burden for advanced traders who are accustomed to using terminals rather than exchanges. This is where automation comes to the rescue.
What Is Automation?
Automation is commonly referred to through many different terminologies, such as automatic trading, system trading, algorithmic trading or mechanical trading. Simply put, automation is a system of trading that saves everyday traders from the burden of conducting extensive market analysis and placing trades manually. Automated trading platforms, such as Superorder, rely on the universal rules of cryptocurrency trading.
A qualified programmer with extensive knowledge of cryptocurrency trading develops these automated trading programs based strictly on trading rules and strategies. The programmer breaks down the rules of crypto trading to the most basic level, such that every set of rules can be executed through a set of commands. The software then executes trades on behalf of the actual person: buying and selling when the desired trading parameters are met.
Why Use Automated Cryptocurrency Platforms?
In today’s landscape, most professional crypto traders prefer automated trading. Here are some advantages over manual trading:
1. Automation is its Core Strength
Just like any other investment, cryptocurrency trading is a game of strategy. You don’t wake up one day and decide to move all your savings on cryptocurrency trades. A trader needs to create a cryptocurrency portfolio, allocate their funds to the portfolio, diversify the portfolio, and track its performance over time.
First-time traders need to thoroughly research the cryptocurrency market, understand the various types of exchanges and trading terminals available, perform a comprehensive market analysis, and learn when to trade and when not to trade. In retrospect, crypto trading is a repetitive activity, and some of the processes, such as portfolio tracking, market analysis, and arbitrage, are quite complex. They change with the dynamics of the trade, making it nearly impossible to manually track them over multiple crypto trading platforms.
Automated trading software removes this burden from the traders by following pre-programmed parameters in decision making. The software performs all relevant analyses in the background and only places a trade when the favorable parameters are fully met. It simply does not get any better than that!
2. Helpful Analytics
Automated trading platforms store portfolio and market data over time. They use their built-in backtest protocol to simulate the programmed trading strategy against the historical data. What the trader gets is a reliable statistical report that represents this data in the form of analytical charts and graphs, which are easy to comprehend.
The simulation serves to forecast how certain trading strategies would perform in the real market. It then generates a detailed report of the risks and returns for each of those strategies. The trader can rely on the backtest report to understand their trade volume as well as their win/loss ratio for decision-making purposes. The report also helps traders understand how to minimize risk and maximize gains. These powerful analytics tools allow professional traders to improve their trading strategies and lead to more accurate projections and successful trades in the future.
3. Better Tracking Capabilities
Professional crypto traders seek to diversify their portfolio by trading across several exchanges. Each exchange is influenced by its own market dynamics, and the buy or sell prices fluctuate differently, resulting in different arbitrages. Since speed and timing are key, traders often must log into the different exchanges and analyze them concurrently. This can be quite difficult even for advanced traders, as they attempt to keep track of each exchange and place each trade at the opportune time.
Automated bots and programs run around the clock in analyzing the different exchanges for you. They significantly improve the chances of executing your trade on time, raising the likelihood of realizing profits.
4. Machines Eliminate Emotion
Crypto traders are human, and emotions sometimes play a key role in the decision-making process. For instance, a trader may be tempted to place higher stakes to offset a previous loss. Or perhaps they might decide to continue trading past their predetermined profit target to make even more, only to see their entire strategy fail.
Automated trading systems are programmed with pre-determined parameters that shield you from making emotional decisions that could harm your trade. For instance, traders can set their stop-loss parameter, which instructs the system to halt all trades once you lose money up to a certain point. They also have predetermined profit targets, which instruct the trading bot to stop trading once the specified profits are realized.
Automated Trading with Superorder
Now that you understand the basics of how automated crypto trading works and its benefits, the real challenge lies in choosing the best cryptocurrency trading software. There are several cryptocurrency platforms that currently offer automated crypto trading. However, none of these can match what Superorder offers.
To start, Superorder is a comprehensive crypto trading terminal. It offers more advanced features and analytics compared to exchange platforms. While many other systems require decent coding skills, Superorder provides tools for codeless automation.
Here is how you stand to benefit from trading with Superorder:
- Superorder is a trading terminal, which gives traders access to trading across multiple global markets. The reliable analytics give you a better chance of placing multiple profitable trades.
- It is a fully automated, multi-trading platform with extended chart time frames generated by TradingView. The chart time frames allow you to track your key trading statistics in a unique defined range.
- It has an advanced strategy builder. You can simply drag and drop your analyzed data, and the strategy builder will create the appropriate classic buy or sell orders, the stop-loss parameters, as well as trailings.
- It has powerful portfolio tracking capabilities across multiple markets and the ability to place hidden orders for traders who prefer to operate anonymously.
- As a multi-platform trading terminal, the Superorder team remains at the forefront of technology and best practices to keep the trading platform up to date with the dynamic trading market environment.
If you need more information on how cryptocurrencies work, be sure to check out CSB Tech’s previous article: Bitcoin, Blockchain, and Cryptocurrency