What is automated trading?
Automated trading, also known as algorithmic trading, is the system that allows traders to create specific rules for trade entries and exits. Once those are programmed, they can be automatically executed through the AI trading system. For example, in the stock market, a vast majority of trades are now done through automated trading techniques instead of manual trading alone.
It is a more efficient alternative to regular trading. Users can turn what they usually spend the most time doing, like monitoring the market and entry and exit rules, into automated parameters the AI will follow. Ideally, when AI bots are used correctly, they can take away what is known as emotion trading; where users would let how they feel about an asset affect their trading performance.
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Automated trading in the financial market works fast and methodically, ensuring the correct times to execute trades is presented to the trader, so there’s less to be concerned with. In addition, an AI bot can carry out the simplest of tasks and more complicated strategies depending on your understanding of the whole process. As a beginner of automated trading, you can purchase AI software that has been programmed to follow basic orders. This is great as it doesn’t overcomplicate the trading process. As your knowledge of the financial markets grows, so will how you use the AI trading system.
Works across several marketplaces
We found out that AI trading bots are capable of working across different financial markets. Popular choices include the forex market, the stock market and the cryptocurrency market. Those who design the algorithms can create an AI trading system that doesn’t have one specific market to focus on, which is great if you’re still undecided on what asset you’d like to consider trading. Cryptocurrency AI bots are becoming quite popular as the market continues to be one of the most volatile markets available to trade.
How does it work?
At TradersBest.com, we looked at automated trading techniques when trading cryptocurrencies. The crypto market is an excellent choice for beginner traders as it is highly leveraged and can be pretty lucrative if trading is successful. The crypto trading bots use data and trends to grow their profits and minimise risks. It is an excellent way for crypto bots to generate passive income during the day. In addition, the crypto market is open 24 hours a day, seven days a week, meaning you can keep the AI working throughout the night if you want to.
Strategies
We looked at different strategies that were quite common for AI trading bots and listed them below.
Grid bot strategy
The grid bot strategy is an excellent choice for beginners as it allows users to set multiple grids of upper and lower cost limits for the cryptocurrency they are monitoring. The AI trading system will then make several trades, buying and selling that crypto within the limit to generate profit. For example, you used this parameter on BTC where the lower limit was £500, and the upper was £1000 in a grid quality. If the BTC price is £750, you’ll open orders to sell and open orders to buy. If the BTC price increases to £900, the grid bot will automatically place a paired order to buy at the original price, £750, and sell at £900. Meaning the user could make a £250 profit to add to their crypto wallet.
Momentum trading
If you’re a momentum trader, it means you essentially judge the market by how much moment it has. For example, you would ride positive momentum with your assets and then sell them immediately when the market momentum shifts in the opposite direction. The time to buy in and then sell off is crucial as the price spike, particularly in cryptocurrencies, changes constantly. This method is good for those who like to constantly monitor the market and generate small amounts of profit throughout the trading day.
Arbitrage strategy
An arbitrage bot strategy is a computer-based program that looks at different crypto coin prices across the exchanges. It allows the AI trading system to make automated trades that take advantage of the price differences of the same coin. For example, let’s say that an arbitrage bot has identified an ADA coin that is trading at a higher price on one exchange compared to another. It will mean the bot can buy the ADA on the cheaper exchange, sell it on the more expensive one, and take in a small profit.
AI trading bots
At TradersBest.com, we looked at several AI trading bots available on the market and listed them below for you to consider. We focused on the cryptocurrency market as it has a high demand for new and improved crypto trading bots.
Shrimpy.io
This AI trading system is best for beginner traders as it offers low prices and allows you to choose between different account types. You’re able to connect to several online exchanges simultaneously and as many crypto wallets as you’d like to your account. There is also a demo account available to traders who want to test the reliability of the AI trading system before spending money. The platform offers a simple to use interface and an easy to understand design, also attractive to new traders.
Coinrule
We found that Coinrule is also an excellent AI trading system choice. It is known to provide a significant amount of strategies for its users. It also has over 150 automated trading templates to use. It’s a good idea for beginners who don’t want to worry about adjusting the pre-set algorithm parameters. Its templates are a key feature of Coinrule as it’s constantly updating the platform and adding more.
Pionex
Pionex gives you access to built-in AI bots and an additional selection of unique trading bots for no extra fee. It’s a great AI trading platform that supports manual trading if you still want to use that. However, it encourages automated trading due to its ability to support traders of significant investments. In addition, Pionex offers low commission fees competitive in the market and a mobile app that has the characteristics of the online platform on a smaller scale.
AI Trading System Advantages
In this review, we wanted to give you a few reasons why an AI trading system could be a good option for your trading experience.
Removes the emotions from trading
AI trading bots are detached from human emotion. It helps traders who have favourite assets and don’t want to sell their position when the time is right. Or buy at the wrong time. The AI bot makes the decisions for you in executing trades, which can benefit those who struggle with this part of the trading experience. Traders will still have to intervene at some point. If the algorithm only tells you when to make a move, you’ll have to execute the trade manually. However, AI bots are highly advanced, so you could also programme the system to execute the trade entirely.
Fast reaction times
Automated software can scan through the financial markets a lot faster than humans at a fraction of the time. It’s more time-efficient and allows traders to make the most of the financial market. An AI trading system can reach more of the market, which means the trader will be given more opportunities to execute trades. AI bots can search through large pieces of information at a time. Some online platforms specialise in real-time trading signals, such as AtoZ Markets. It allows users to respond to the several trading opportunities presented to them and execute positions efficiently.
Advanced technology
AI trading systems are constantly developing as the future of the financial markets becomes more digital. It is excellent news for traders who are finding ways to improve their trading performance. Nowadays, manual trading can only get you so far when you’re up against prominent financial industries and their high-speed trading systems. Even if you don’t have the latest AI bot or trading system, developers continue to create the newest options out there for everyday traders. So you can benefit from real-time responses and better trading experiences overall.
Minimal maintenance
While some attention is needed from the trader, the AI trading system will generally do most of the work for you. They’re able to research historical data and look at the financial market as it is now and find the best times in the market for their user to execute trades. If you’re a beginner at trading and using AI bots, then it’s a good idea to stick to simple automated trading programmes. This will allow you to develop your understanding of the market and not require much intervening of the parameters as the markets continue to change. If you want to make adjustments to the AI and add more advanced parameters, it could require more of your time to monitor it and the market.
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AI Trading System Disadvantages
We highlighted a few key disadvantages below.
A lot of work is required
An AI trading system needs the user’s attention to maintain the program performance or even when creating it. It is not fully automated as the name might suggest because you will have to intervene ever so often manually. For example, if there is more volatility in the market than usual, you would need to alter the position size to suit the changes. Understanding an AI trading system requires a lot of time and dedication to grasp its complexity fully. If you’re not sure how to alter the software when needed, the software will eventually be redundant – meaning you won’t be making money. It’s a good idea to consider how much time you can commit to improving your trading strategy.
Psychological pressure
As humans, we like to intervene and do things ourselves. It can be the case when your AI trading system follows its parameters and does well, generating returns. Or when your AI is not doing so great and resulting in losses. The idea is to trust that the AI knows what it’s doing as it goes by data and market research instead of feeling to do what looks right. AIs are supposed to remove the emotions from your trades so that you don’t make quick decisions that result in losses. If you struggle with removing the pressure and feeling from your trades, then automated trading may not entirely be for you.
Exaggerated returns
Some online trading platforms advertise their own AI trading system as being the best in the market. They claim to have high success rates from users and guarantee profits. Unfortunately, this isn’t always the case, and many traders, specifically beginner traders, fall for this in the hope it’ll help them with their trading experience. It’s essential to research several trading systems and determine if what they’re offering is too good to be true or an excellent choice to invest your money in.
Complex system
If you want to create your own AI trading system, you need to have a detailed programming understanding on top of financial market knowledge. If you don’t have these as the basics, you may not benefit from an AI to its full potential. Algorithmic trading is complex. Although marketed to be easy to use for beginner traders and more advanced traders, you need to comprehend to make the most out of the AI. The more you understand, the easier it will be, but this isn’t supposed to happen overnight. Some online platforms offer their services to help users develop their automated trading knowledge while they trade. Platforms like AtoZ Markets are known for this as they provide the tools and resources to improve traders automated trading skills.
Conclusion – AI trading could be right for you
Overall, automated systems are the way forward for trading. If you’re new to the financial markets, we recommend understanding your chosen market first and considering using an AI trading bot to help develop your trading experience. Our TradersBest.com review looked at how AI bots remove the emotion from trading, resulting in quicker decision-making and successful execution of trades.
If you’re eager to dedicate more time to understanding how automated trading techniques can benefit your trades in the long run, then consider using AI. A lot of work goes into successful trades, including monitoring the AI performance and backtesting it to ensure your algorithm does what it’s supposed to. But in the end, you could see returns.
AI Trading System – FAQÂ
🤨 Is AI trading better than manual trading?
An AI trading system can scan through thousands of assets in a financial market of your choice to find opportunities to execute trades within a fraction of a second. Humans would still be searching through the market by the time an AI does the whole process. The automated process is time and cost-effective because the user can simultaneously make more trade position decisions. In addition, if you’re a beginner trader using a simple AI bot will require less maintenance than monitoring the market on your own.
âť” Can I trade forex with AI bots?
AI bots are helpful for traders who want to make the most out of their trading experience. They encourage users to diversify their portfolios. The algorithm-based trading follows the pre-set instructions set by a developer or the trader to monitor their chosen financial market. In our TradersBest.com review, we look at why an AI trading system is a good idea for new traders and traders experienced in multiple financial markets.
🔎 Is there a quick way to understand AI trading bots?
Automated trading systems require you to have some understanding of how algorithms work. If you want to create your own AI trading system, you’ll need extensive knowledge and the funds to help you develop the algorithm to do what you tell it to do successfully. Trading with AI bots can be time-consuming, but the payoff is rewarding when your skills develop, and so does your potential to generate returns consistently.
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