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HomeMoneyHow To Automate Trading Strategies?

How To Automate Trading Strategies?

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Cryptocurrency trading cannot rely on luck. To effectively open trades and make a profit, you need to have a strategy, as well as read some trading strategy guides to learn how to use it properly. To make the strategy even more effective most traders will make an extra step and will convert the strategy into the fully functioning trading bot. And there are number of services like Tradingview bot, 3commas bot or WunderTrading bot and others that will assit you in building the fully automated robot.

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But let us start from the beginning. Cryptocurrency trading strategy is a set of rules that a trader has developed to manage his trading.

Developing a good strategy gives the trader the following advantages:

1. Trading without emotions

A trader who has no strategy can make decisions with excessive emotions. He may panic and experience indecision when the market moves against him.

2. Time saving

Developing a trading strategy helps to free the trader from having to watch the chart all day and provides time to develop and tune further strategy.

Popular strategies for cryptocurrencies

A good strategy is very important to make a profit in the cryptocurrency market. Check them out to determine the best strategy for trading.

Long-Term Holding

The simplest strategy is the long-term holding strategy, also known as “HODL.” The rules are simple: buy a cryptocurrency that you think has a promising future and hold it for a few months or years. For example, you can buy Bitcoin on any popular exchange and forget about it for a long time.

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Day Trading

Day Trading

Crypto daily trading strategy is the opposite of long term holding. This is buying and selling cryptocurrencies during one day and often even several times during the day. The trader earns profit from slight price changes. Day trading can bring large profits if done correctly because of the inherent volatility of cryptocurrency.

When trying to figure out what is the easiest day trading strategy, remember to always stay calm and stick to the plan. Since the market moves quickly, it is quite realistic to make a good profit in just two or three trades a day. Day trading usually takes a few hours a day.

Scalping

Scalping strategy is based on minor stock price changes during the day and making frequent market transactions during the session. Position holding period lasts from a second to several minutes, and scalpers may make up to several hundreds of such transactions per day.

The essence of scalping is that slight price fluctuations are observed even on relatively calm markets. It is possible to get a good profit in the case of a big amount of transactions. That is why scalpers as a rule follow short-term charts which reflect momentary price changes.

Arbitrage

Cryptocurrency arbitrage is buying a cryptocurrency on one exchange and selling it on another in order to profit from the price difference.

The simplest arbitrage scheme between cryptocurrency exchanges:

1. Find a coin that has a lower rate on exchange A than on exchange B.

2. Buy the coin in exchange A.

3. Sell it in exchange B.

4. Make a profit on the difference.

Arbitrage has been around for a long time, and it also exists on stock and currency markets. But it’s harder to trade on traditional exchanges, because prices are roughly at the same level. In the world of cryptocurrencies, which have very high volatility, it is still possible. Exchanges that do not cooperate with each other effectively, which leads to high price differences, also leave this opportunity.

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Copy Trading

Crypto copy trading strategy is copying trades for more experienced traders. The user can choose which trader to follow. The cryptocurrency owner also determines how much of the digital assets he is willing to allocate to copy trading.

Entering the cryptocurrency market requires learning its specifics, time, effort, and willingness to take risks. Therefore, for some beginners, copy trading may seem to be the optimal solution.

How to automate a trading strategy? 

As you can understand from the text above, profitable trading strategies have only a few basic rules, which can be written down in the form of an algorithm. In other words, you can automate the trading of your chosen strategy by using software called a cryptocurrency bot.

A cryptocurrency trading bot is a software  that buys and sells digital assets, according to the algorithm. For most traders, especially if you trade intraday, a cryptocurrency bot can be an important assistant and significantly reduce time spent analyzing markets and filtering signals.

The level of automation of your trading strategy depends on the power of the trading robot. The simplest ones will send messages about a good time to make a deal. More complicated robots, such as trading bot with TradingView, will take care of buying and trading cryptocurrencies according to your chosen strategy.

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As an example, let’s take a look at how a robot can automate your arbitrage trading. All you need is to connect it via API to exchanges where it will compare prices of cryptocurrencies.

Immediately after launching, the robot will start comparing prices of the cryptocurrency of your choice on the exchanges it is connected to. As soon as it finds the cheapest one, it will instantly buy the coin on one exchange and immediately sell it on another, thereby making you a profit.

Most robots can connect to Tradingview, a popular online service and social network for traders that provides a vast amount of signals to buy and sell cryptocurrencies. Thus, the TradingView auto trade bot will take over the trading using Tradingview’s extensive capabilities. If you still don’t know the answer to the question – “Which trading strategy is the best?” Tradingview can help you with that. You can also use the Tradingview bot to automate your trading.

In the same simple way, you can automate your copy-trading strategy – there are not only trading bots for this but also special cryptocurrency platforms. One of them – WunderTrading allows you to automatically copy trades of successful traders without making any special efforts. In addition, you can link your WunderTrading account with your TradingView account using the capabilities of both platforms. For example, TradingView signals bot will help you determine the best moment to enter the market and even make a trade for you.

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