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The cryptocurrency industry saw strong volatility in 2022 as fears of the hawkish Federal Reserve and stability of stablecoins rose. At the time of writing, the total market cap of all cryptocurrencies was about $1.3 trillion, which was lower than the all-time high of more than $3 trillion.
While the cryptocurrency crash was a difficult thing for holders, it was a good thing to many day traders who tend to benefit when prices rise and fall. This happens because many crypto exchanges now allow people to short cryptocurrencies and tokenized assets.
In this article, we will explain some of the best strategies of making money during a crypto market crash by using auto trading robots.
What are trading robots?
A trading robot is a piece of software that does analysis and then execute trades automatically. In most cases, these bots are usually created by combining technical indicators and other chart analysis patterns.
For example, if you are a trader who focuses on oscillators like the Relative Strength Index (RSI) and the Stochastic, you can create a bot that will execute a trade when the two drops to the oversold level.
Similarly, if you typically focus on an indicator like the Volume Weighted Average Price (VWAP), you can create a bot that opens a bullish trade when the price moves above the indicator.
There are several ways of creating a trading robot. First, if you have some coding experience, you can easily use your knowledge to build a bot from scratch. Second, to save time, you can use one of the many free and premium robot builders to create the bot. These builders allow you to use the drop and drag technique to build the bot.
Finally, instead of building the bot from scratch, you can easily buy it from a marketplace or from an individual who has created it. The benefit of using these bots is that the process of installing them is easy.
Using trading bots in a crypto market crash
2022 has not been a good year for crypto holders. For one, the prices of most cryptocurrencies has crashed by more than 30%. Some such as Terra Luna, Anchor Protocol’s ANC, and Terra USD have all crashed to zero. In total, investors have lost more than $1 trillion.
However, cryptocurrency traders, especially those who use robots like Bitcoin Profit have made strong returns. This happened since bots are trained to buy when there is an uptrend and short them when there is a downtrend. As such, these bots are able to make strong returns regardless of the market conditions.
As stated on the German site Cryptomonday.de, “Die Bitcoin Profit software rühmt sich mit einer Gewinnrate von fast 92 % und täglichen Gewinnen von bis zu 1.500 US-Dollar aus Trades”.
This is translated in English as “the Bitcoin Profit software boasts of a win rate of almost 92% and up to $1,500 daily profits from trades”.
The process of using a trading bot like Bitcoin Profit is simple. First, do your research about the bot that you want to use in the market. This involves reading online reviews and finding out more information about its features.
Second, register for the bot using your email address. After registering, you will get access to Bitcoin Profit’s platform where you can test it. It is always recommended backtest it well. Backtesting is a process where you use historical data to gauge the performance of the bot.
Finally, if the bot works out well, deposit your money and activate the bot. Bitcoin Profit accepts as little as $250 to start with. It is always recommended that you start with a small amount to test its effectiveness.
Why use a bot during a market crash
There are several reasons why you should use trading bots during the crypto market crash. First, unlike an individual, the crypto robot works throughout the day. It does not sleep. Therefore, the bot will be able to take opportunities across the board.
Second, a good bot has excellent risk management tools such as a take-profit and a trailing stop-loss. A take-profit is a tool that automatically stops a trade when it moves to a certain profit level. A trailing stop-loss, on the other hand, is a tool that stops the trade when it reaches a certain loss level. It differs from a normal stop-loss because it follows the trade.
Third, the bot deals with what it is programmed in. As such, unlike a person, it does not introduce emotional items in trading decisions. Finally, a good bot performs well in all market conditions including when it is range-bound and when it is trending.
Summary
Trading robots are excellent tools that people use in the market. In this article, we have explained how bots like Bitcoin Profit work and some of the benefits of using them. Still, there are several risks involved especially in periods of high volatility. For example, there is the risk of an up or down gap, which is hard to predict using technical analysis. Also, the bot does not include the news factor in the market.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.