What is Cryptocurrency automatic trading?
Cryptocurrency trading market is boosting day by day and this year it has grown exponentially. Bitcoin is the largest cryptocurrency which is growing estimated 1500 percent year. But the question is whether this growth is due to real human buyers or automated, So before understanding the cryptocurrency automatic trading it will be interesting to understand about the trading bot.
What is Crypto Trading bot?
Bot is the automated trader that works in short term by buying and selling automatically. Real human buyers are considered as the emotional buyers and sellers but opposite to that as the bots are programmed so through them the selling and buying can be without emotion in case of certain triggers that can be responsible for the dramatically crashes in the trade market.
We all are familiar with the Black Friday 1987 on which 30% equities were dropped in single same day and it was not due to emotional human buyers or sellers it was due to programmed trading which was first generation bots and were programmed to sell stocks automatically in case of price drop.
Now it is important to understand about the pairing between bots and cryptocurrency. These days bots are advanced and more technical than the 1987 first generation bots those caused the equities crash. There is nothing wrong to say that bots are unfiltered cryptocurrency that started picking up the stream. So these days’ bits are now prevalent across all the cryptocurrency exchanges and the skilled individuals can take profit in the opportunistic situations.
To understand the automatic cryptocurrency trading we can take the case of Neo in study as Neo with the Chinese equivalent of Ethereum’s 5800% rise in 2017 so the investors started piling into Neo and then it became the prime territory for trading bot not only to operate but also to take advantage of inexperienced investors and the overly optimistic ones. So on 29th November the advanced crypto trading bot started detecting the abnormal signals that was indicating for the multiple bots trading on Neo. So this multiple bots trading caused the prices of Neo to crash within minutes which further lead to fall of Neo from $34 to $3.74 with the snap of fingers.
When Neo returned to its position of $34 till then many investors were lost almost everything so it was just the glimpse of automatic trading which can lead to flash crash. Other than this cryptocurrency automatic trading bots can manipulate the crypto markets by artificially inflating the price. So the automatic trading behavior leads the beginners to pay over for the coins that they are suppose to buy.
So it can be difficult for the beginners to understand about the in depth concept of crypto currency automatic trading that can left them with lost almost everything even when are hoping to gain profit from the market. so with the understanding of automatic trading means the programmed trading for selling and buying at the time of high and low in market, it is also important to detect the automated bots means where and when they are at work. It is possible only when we could understand the advanced analysis tools. This detecting task can be easy in hindsight means one can detect the sudden steep drop or hike in prices that are due to manipulation of automated trading bots in instance.
After matching the drop in prices with their correspondence time and the signals of bots before the flash crash we can detect that the dips are not normal means purely these are not due to human trading behaviors. The cryptocurrency automatic trading can be detected from the price momentum and the volume as by spotting the coordinated buying pattern one can avoid potential flash crash before their happening.So with the advancements of trading bots the platforms will accelerate research and developed for the counterattack on the programmed trading so that the trading market can be stabilized and regulated and the end can be given to predatory bots.