Trading bot algorithms are automatic software programs for trading, usually for cryptocurrencies like Bitcoin etc. These decisions are based upon pre-set conditions, which can be either true or false, whether or not to undertake a cryptocurrency trading transaction. So this is different from manual orders for trading, and is based on programmatically executing the trading strategies.
Understanding Cryptocurrency Trading Bot Algorithms
Consider a flowchart, which has a series of steps, and at each step you proceed with a decision, or yes or no condition. Once you reach the final decision, the instructions set for that flowchart will be executed. Trading bot algorithms are also the same and companies like execuium.com are providing such bots at very nominal rates these days. The algorithm or the rule, there are many rules for cryptocurrencies, will keep on iterating and re-iterating themselves via an automatic bot. This would result in hassle free trading transactions on behalf of the investor. Sometimes, the trading bot algorithms are used only to generate the signals, and the final decision is left to the investor. However, these can be risky, and thus you must go for the best trading bot algorithms even if that implies investing a lot more money in the bot itself.
So, we can also say that a trading bot algorithm is the rule, based upon which the computer generates the trading signals for buy or sell in financial marketplaces. The three basic components of any such algorithm are: the entry rules that signal buying or selling times, the exit rules that indicate the time to close the current position and the position sizing that figure out the bulk to be bought or to be sold ideally.
Self-Programmable Trading Bot Algorithms
Another aspect is that these bots are self-programmable as well. You can create a piece of code for yourself, or you can customize an existing piece to suit your needs and preferences. Financial markets are inter-woven twines of very complex statistics and actuaries, so this is usually not recommended, but if you are sure, then you might want to create your own bot algorithm as a financial analyst.
Never-the-less, keep the following market dynamics in mind if you are going in for a self-created trading bot algorithm:
Technical Research and Investigation
Fundamental economic and financial data
Market structure and microstructure
Current, past and future trends in cryptocurrencies and other financial markets
Various regression and correlation methods
Who Must Use Trading Bot Algorithms
If we ignore the cost factor, then ideally every investor, big or small, must be using a trading bot algorithm. Further, both the experienced and the novice categories can exploit the advantages of these algorithms. The big and experienced will benefit from it in the sense that they can save a lot of time with the help of these trading bot algorithms, especially for cryptocurrencies where market volatility is huge. And the small or amateurs can use it for support and assistance.
Where to Look for a Trading Bot Algorithm
If you are going for this option, chances are that with the number of fake and inaccurate service providers present today, you would get you delayed information, or flexible and inexact information and signals in-turn, which would cause you big losses rather than profits. Better to choose services from reputed and reliable firms like executium.com, who have been playing the market for periods long and are well familiar with all the ins and outs. At executium.com, the trade bot algorithms are different for a different set of users, and are also customized before they are administered for some accounts.