Robots have taken over the world of traditional trading and are on track to do the same with cryptocurrencies

Wall Street, for many this name is synonymous with money, profits and success. As one of the most important stock exchanges in the world, it is assumed that those who work in it, brokers or traders, are experts in market analysis that can make millions of dollars in seconds.

However, for others that name is also synonymous with risks and large losses, since traders can not control the value of the shares and, although they are experts in the field, they are still human and can make mistakes in their predictions of when there will be peaks. or valleys in market prices.

This risk is the day to day of stockbrokers, who can win or lose everything depending on the decision they make and when they do it. And this is where technology makes its appearance, to help these people make the best possible decisions and even, in some cases, do it for them.

Reference is made to the so-called "trading robots", who are in charge of protecting the investor throughout the trading process, which consists of the purchase-sale of quoted assets with a lot of liquidity in the market or stock market (such as shares or currencies). ), whose objective is to obtain a profit.

What exactly are "Trading Robots"?

The robots, also known as bots, trading, are a software program based on a special algorithm for this activity (algorithmic trading), which is responsible for solving mathematical problems which send orders to buy or sell assets following established parameters.

The bots can be programmed by the trader so that the algorithms analyze instantaneously the market and their movements, information that will allow them to determine when is the best time to buy or sell. Likewise, the investor can tell the robot to make the purchase or sale of shares in his name.

The study of the bot is based on constant monitoring and analysis of the market, focusing on volume, orders, price and time. However, it is also possible to program it according to the user's preferences.

Currently, these robots are widely used in the main stock exchanges of the world, as for example on Wall Street, where even some think that today the real traders are not human. "True trading (short-term investments) is done automatically by robots," said Pádraig Belton, a BBC economic affairs reporter.

Your role in the cryptocurrency market

The cryptocurrency market is particularly volatile, which is why investors have looked for ways to protect their assets as much as possible, and this is how they came across trading robots.

The bots have had a growing fame in this market, since they allow their users to have total control over their actions and the possibility of making the best decisions based on meticulous studies of market behavior, even if they are no matter if they are traders. with experiences or someone who is starting the activity.

In fact, some say that the use of this technology is even more effective than traditional manual trading.

Although, undoubtedly, one of the most important functions of these bots has to do with their ability to make purchases or sales, even if the investor is not present.

The cryptocurrency market, unlike a stock market, never sleeps, never closes. This can represent a great difficulty at the time of investing, since a neglect of a few hours can mean gigantic losses.

But the trading robots offer a margin of tranquility to these traders, since before any unexpected variation they will be able to execute operations already programmed and to make purchase or sale decisions based on their analysis.

Strategies for decision making

The robots trading have two main strategies on which they are based to make the best decisions

Arbitrage: the bots analyze the different exchanges and use the price difference between them to obtain profits. That is, they buy in the exchange house that has the cryptocurrency at the lowest price and sell it in the one that has it at the highest price.
Market Creation: the bots provide a variety of positions in the purchase and sale prices of different cryptocurrencies, in order to obtain gains in transactions.
The technology is still imperfect

Despite many advantages for an investor, especially one dedicated to cryptoactives, use trading robots, we must remember that they are not perfect.

The analysis of the cryptocurrency market is extremely complicated, even for a machine. This is due to the large number of external factors that affect it, factors that are often outside the monitoring of bots. Simple data analysis is not enough, since volatility. However, it must be remembered that this same volatility means that the results given by the bots are not always 100% reliable.

It is important to remember that, although robots can be useful, they are not an indispensable requirement to carry out operations within the market. You can get good results without the bots; In addition, they can be complicated to handle for people who are not familiar with them.

However, it is important to be attentive to new technologies and the benefits that bots can bring, in the future, to the market of cryptocurrencies.