The Role of Market Makers in Crypto Trading (05)

Continuing with the previous post, today I will share two more trading strategies with you. Basically, these strategies are applied by market makers. And by applying all these strategies, the crypto market is stabilized and the volatility and risk of this market are minimized to a great extent. In this way, market makers make this sector even stronger. Let's discuss two new strategies today.

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Automated Trading Bots:

Given the 24/7 nature of crypto trading, human market makers can't possibly monitor the markets at all times. Instead, they use sophisticated trading bots programmed to execute trades based on certain conditions. The biggest advantage of automatic bots is that the market is followed up 24 hours a day. So the bot can detect and control the slightest change in the market and any kind of change. So it is not possible to spread too much from here because the bot can automatically collect data from here and make trading decisions. This is a very important strategy to stabilize any market and control market volatility. Someone could make the market volatile and spread it widely, which is not possible now because automatic bots will control these.These bots can analyze market data in real-time and react to changing conditions far more quickly than a human trader could.

Risk Management:

Since cryptos are highly volatile, market makers must carefully manage their exposure to price fluctuations. One way they do this is by using hedging strategies. If a market maker is providing liquidity for Bitcoin, they might take a short position in Bitcoin futures to protect themselves from the risk of a sudden price drop.
I hope you have understood the two strategies very well from today's discussion. In the next episode, the important role of market makers in crypto exchanges will be highlighted.

~ Regards,
VEIGO (Community Mod)

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