Automated Trading: Your Answer To A Volatile Market


SBF, FTX, BTC: These three, three-letter abbreviations have completely dominated recent headlines, and for good reason. The world finally took another look at crypto.

Collapse: What happened to Crypto?

Sam Bankman-Fried (SBF) is an American entrepreneur who was recently arrested following the total collapse of his claim to fame, the crypto exchange FTX. Following this was a wide-scale devaluation in the market cap of almost every major crypto coin.

Economies and markets are the subjects of public opinion. When fraud was revealed at the hands of SBF and accomplices, the cryptocurrency market went into a period of incredible volatility which caused bitcoin to plummet and lose a fourth of its value in November 2024.

Naturally, losing a lot of money gives people a few options. Either turn around and walk away with your tail between your legs or think, ‘what could I have done differently?’ This question, and much more, will be answered in today’s article.

What can I do during a downturn?

For the wisened crypto investor who believes that market volatility can be a good thing, how do you cut your losses? Your best friend in this environment is, fortunately, computer software.

Automation has been used in chess to beat the masters of the game since Gary Kasparov was defeated by an AI in 1997. Automation can also help us beat the market with incredible efficiency and accuracy. Automated trading is the process where hyper-intelligent, statistically perfect software runs simulations and executes the best possible trades in that given moment.

(Un)regulated: a word of wisdom


Before continuing to sing the praises of automated trading bots, there is a caveat. Trading bots are still an unregulated market, which means you need to be extremely cautious when choosing your software for automated trading.

Ensure you visit a review site that extensively vets and tests each bot to maintain the highest levels of security for your crypto investments. Without this vital step, your hard-earned investments can turn into mulch from the work of a single, bad-behaving AI.

How does automated trading work?

Trading bots are usually set up with a pre-programmed wizard to assist you to reach your profit target. Despite this, there is still a lot of finicking than is possible to suit your preferences.

Servers are the ultimate data holders which connect your mobile or computer to the automated trading bot, the software that actually makes your trades for you. Although there might be an installation, all of your tradings are held securely in a room managed by experienced hardware engineers hard at work over which server rack to choose.

Do androids dream of electric sheep?

The largest single criterion for an automated trading bot’s activity is, unsurprisingly, risk. Most bots are set up in either high, low or medium risk. This is essentially the volatility that you are willing to see your financial assets go through.

An imperative factor to remember is that volatility moves in both directions. If you happen to have a chance to make much more money, you also have a chance to lose more money.

If you are willing to witness larger volatility, that is, a larger potential reward or decline in your assets, a high-risk bot is for you, vice versa. This is a gross oversimplification of a topic which is the livelihood of several wall-street analysts, but you can find more info on worthy automated trading bot review websites to really finalize your choices.

Advantages: Takes you right out of the picture!


Two of the main draws of automated trading involve removing the human element of your investments. Computer software naturally has no emotions to steer their choices, so can’t make a bad call during a market downturn because of a fear of losing money.

Backtesting is also a common practice that rules your trading. A computer, unlike a real trader, can almost perfectly execute these rules without contention. Computer software has the discipline that humans lack and preserve this iron will even in the most volatile markets. Bots have been proven combatants in global markets since the early 1990s, and for a good reason.

Affects on your mind, body, and spirit…

The second major advantage is your sanctity of mind. Letting a bot help you make trades and guide your investments through market conditions is naturally far less stressful than doing it yourself, an especially welcomed side effect in our stress-filled lives.

Lastly, automated trading can also involve you in intriguing ways. Automated trading either comes pre-programmed with information from the software provider or, uniquely, allows the user to customise the programmed conditions on the bot. This vital difference is what allows a user to really use bots to their advantage and simply become a better version of themselves.

The Negatives: Glitches, Lag, and Computers

The only substantial downside to using a trading bot is the possibility of glitches. Although this is very uncommon with today’s technology and support, the reality is that your capital can deflate due to glitches in the hardware or software, no matter how rare they may be.

Another possible downside to automated trading is a larger downside to AI. Bots struggle to pick up the nuance that humans can detect far more easily. If you know your niche market well, you can trust yourself to ride out the storm of a downturn with your own intuition. If you do not, on the other hand, a worthless investment is something a bot will never keep unless programmed.


Automation: The future?

Automated trading is the mathematical answer to investing. Even if the rest of the world decided to succumb to their feelings and dump their money out of crypto just because an exchange fell, you can still make a decent profit even in difficult markets.

Although this won’t replace the gut-feeling decisions of today’s financially educated, this is a step in the right direction. Naturally, the best combo would be sound financial reasoning mixed in with automated trading and a healthy handful of your own trades and bets on the market. This isn’t perfect, of course, but a pretty good start to managing your finances.

The best way to view this is perhaps as an addition to your trading habits that can give you the assistance you need during tough times. Bots are the prosthetics of the trading industry, giving you the extra boost when you might not otherwise be able to help yourself.

Written by Kan Dail