What you Need to Know Before Investing in Cryptocurrency and Why Gunbot is the Best Crypto Trading Software for Day Traders
Gunbot is a cost-effective crypto trading software that provides traders with the ability to automate their crypto trades. It has many features, including an easy-to-use interface, customizable strategies, backtesting tools, high execution speeds on all exchanges, and 24/7 customer service.
Crypto trading can be a profitable and fulfilling way to invest and make money, but it takes some time to get up to speed. As you learn more about the market, your strategy will grow in complexity.
At some point, this may become overwhelming for most traders, as they must spend hours every day doing research and making trades manually. If this sounds like you, then Gunbot might be the solution you’re looking for!
Gunbot is the best way to acquire cryptocurrency through trade because it automates your trades while still being customized by you as needed. You could use Gunbot for scalping, day trading, or swing trading, depending on how much risk you are willing to take on to make profits faster than usual.
But what if you don’t know how to trade? Investing in cryptocurrency has risks, but with the Gunbot trading software, those risks are minimized so you can make more money…
Keep reading and learning about this profitable crypto trading software and the cryptocurrency markets so you can make an educated decision before investing your hard-earned cash!
Understanding Crypto Day Trading
Day trading involves entering and exiting trading positions on the same trading day; this definition is inherited from the stock market that actually “closes at the end of the day” (not the case of crypto trading that never sleeps). It is also called intraday trading; day traders aim to profit from the change in the financial instruments’ prices within a day.
Deep understanding and market experience is a prerequisite for any successful crypto day trader. Day traders use technical analysis to create strategies for trading. They also use technical indicators, chart patterns, price action, and volumes to identify a trade’s entry and exit points.
Cryptocurrency day traders do not necessarily get involved in the fundamental analysis as the fundamental events that can change the market conditions take a long time to pan out. Therefore, day traders may indulge in “trading the news,” whereby they place their shares on a particular financial instrument and take advantage of the sudden yet short-lived spike in trading.
Market volatility is the primary source of profit for crypto day traders. Liquidity and volume are the most crucial for day trading as quick trading requires good liquidity and is especially true in the exiting position. The trader’s trading account can be drastically affected by a considerable downside. Therefore, traders tend to place their money on highly liquid market pairs. In addition, traders mostly try to trade with the capital they can afford to lose.
Day traders engage in multiple strategies in the market. Scalping involves using small price moves like liquidity gaps, bid-ask spread, and other market efficiencies for a short period to make a profit. Under range trading, a day trader looks at price ranges within the market structure to create trade ideas. News-based trading involves seizing trading opportunities from the heightened market volatility created by news events.
Crypto Day Trading on Automatic? Yes, with the help of crypto trading bots!
Crypto trading bots are a way to take the day-to-day, hour-by-hour grind out of crypto trading. If you’re looking for an easy and risk-free investment opportunity that can help your portfolio grow steadily over time, then look no further than these digital money-making machines!
Crypto Trading Software like Gunbot is a form of High-frequency trading or HFT, an algorithmic trading strategy primarily used by quantitative traders and involves creating algorithms or bots that can enter and exit the market as soon as possible profits and minimize losses.
Gunbot software is suitable for new and advanced traders because it won’t require in-depth knowledge about advanced concepts of the market or strong knowledge of computer science and mathematics. It revolves around gathering high-quality information about the market via exchange API Keys or WebSockets.
Then the bot uses that info to execute your trades as soon as your strategy conditions are present in the market.
Is any other bot there yet? Gunbot is (SOON) running on WebSockets!
The Advantages of Cryptocurrency Day Trading
Traders can capitalize on many unique features that the crypto market offers to maximize their gains when day trading; however, as with anything, there’s also a downside, so let’s go over some of the most well-known pros and cons.
5 Crypto Day Trading Pros
- Crypto Market Never Sleeps: One of the special features of crypto trading is that the market is open 24/7. We are fortunate to benefit from all the perks from a market that never sleeps with altcoins traded actively worldwide.
- High Volatility: When it comes to cryptocurrencies, you should know that the market is very volatile. Bitcoin can start the day at 50k, and not even a couple of hours later, the price can crash to 40K, and old-time traders will not even flinch. If you want to start day trading, though, this volatility can be a very lucrative instrument as the opportunities to profit are plenty.
- Crypto is Mostly Unregulated: Contrary to the stock market that is heavily regulated, cryptocurrency trading is loosely regulated and doesn’t come with the same restrictive rules that the stock market does. You can start trading regardless of experience, account size, or even age in many cases. That means if you would like to start day trading, the hurdles are significantly lower and easier to “get in” on crypto.
- Open Data and Transparency: In the cryptocurrency market, you generally do not have to pay fees to see the order books on the exchanges. That means that data vital to day trading is available for you to see with no restrictions. If you want to check out the order book, you can get this info 99% of the time without even login on the exchange.
- Green Market: Luckily for us, the crypto market is easy to get into, and there is plenty of newcomers and less-skilled traders coming in every day. The number of new traders means that if you have a little more knowledge automatically gives you an edge so you can get in and out of positions or react quickly to situations and avoid loss.
On a side note, these exchange interfaces will often come with a range of built-in technical analysis tools that will make it even easier for you to grasp trends, volume, and volatility. Even though this will not affect your decision to start day trading crypto, it is definitely a plus and can help you on your journey to getting started.
The Disadvantages of Cryptocurrency Day Trading
As with most things in life, there are downsides to day trading crypto so let’s dive into some of them; keep reading.
5 Crypto Day Trading Cons
- Crypto Market Never Sleeps: Wait, wasn’t this an advantage? Yes, it is, but it can turn into a disadvantage also because unless you use a crypto trading software to work for you while you sleep, you could wake up to a sudden drop or pump in price, and you’re too late to the party.
- Crypto is Mostly Unregulated: Yep, this is another two-way street because if an exchange closes its doors, gets hacked, or decides to “exit-scam” with everyone’s funds, then there is no one to help you recover those funds. Fair warning, never put all your coins on one exchange, no matter how “SAFU” it claims to be.
- Media and News: This one goes hand in hand with the volatility aspect; the smallest bit of news from a random Tweet can send the price to the moon or dip in the time it takes you to sip a cup of coffee. If you’ve been around for a while, you probably know what I’m talking about and perhaps even gone thru some nasty Bitcoin dumps.
- Crypto Liquidity: Relatively speaking, the cryptocurrency market is tiny. It can be pretty hard to get out of a position with the price you want when you want it, which is naturally not ideal for a day trader. Slippage is a more significant problem than in markets for other asset classes.
- Crypto Micro Niche: While it’s true that there are thousands of cryptocurrency coins and tokens on the market, the reality is that only a fraction of those are actually tradable on most exchanges which obviously puts a grip on the whole amount of trading opportunities that there are in this industry.
Day Trading and Cryptocurrency
Day trading does not have a good reputation in the market for cryptocurrencies. Around 95% or higher of the number of traders are estimated to have lost their money by day trading Bitcoin.
Various research sites note that an average crypto investor in day trading falls short of the market index by 1.5% every year, 40% of all day traders trade only for a month, and 80% quit within the first two years.
The number of day traders falls drastically over the years; only 13% of traders day trade after three years and only 7% after five years. Traders without a respectable track record continue to trade despite unfavorable results.
Causes for Underperformance in Cryptocurrency Markets
Traders underperform in cryptocurrency markets because they are unprepared for the task and learn their lessons after losing their money.
Emotions tend to get in the trader’s way, and they do not think rationally while day trading.
Traders are confined within their own set of established rules and refuse to trade outside them—they do not trade with a defined system.
Overconfidence among traders can be two types: Overconfidence about the quality of information with the trader and overconfidence in the ability of the trader to act on this information at the right time to gain maximum profits. However, studies have shown that frequent trading does not ensure maximum returns. On the contrary, these studies show that the more active a trader is, the more likely he or she is to lose money.
Overcoming overconfidence starts with realizing that as a trader, you are competing against automated trading systems, institutional investors, and others who have better knowledge, data, and experience about the market than you.
That’s, of course, if you’re on your own and doing manual trading without Gunbot crypto trading software.
Traders tend to make bad decisions when their emotions and regret cloud their thinking. Research has shown that traders are almost twice as likely to hold on to a losing position and sell off a winning position early to avoid regretting the loss of the original cost or the gains, respectively.
Setting fixed trading rules, selling losing trades or winning trades after a particular level, and especially using pre-defined crypto trading strategies can help traders not to be overcome by emotion.
Given the lack of time and interest for a trader to know everything about every cryptocurrency, traders are more likely to invest in those they are familiar with. Economist Herbert Simon, also a psychologist, calls this phenomenon “Bounded Rationality,” whereby we make decisions based on our limited knowledge. We make the most satisfactory decisions with the most efficient results with bounded rationality.
As a result, crypto traders are more likely to invest in a cryptocurrency that came to their knowledge from financial media, websites, and other sources outside the traders’ research. Part of the problem is the effect of media on a trader’s economic activities. A trader must always consider the media as fake but a data point nonetheless.
Learning and researching about well-known and lesser-known cryptocurrencies may reveal lucrative trading options that would have been unavailable for traders had they waited.
Cryptocurrencies are highly volatile, and their prices change drastically in a moment, and short-term investors may not be able to take quick actions to ensure maximum returns.
Cryptocurrency traders cannot invest the time required to make optimal trades manually as it requires monitoring cryptocurrency exchanges round-the-clock. Therefore using a crypto trading software like Gunbot will level the playfield.
Traders often attribute their success or failure to “Random Reinforcement“; they place their skill or lack of it to a result beyond their control. Traders may earn a profit by making quick trades in cryptocurrency, making them cocky and pushing them to make impulsive trades and lose all their money in the end.
On the other hand, the market can not punish traders with a well-developed crypto trading plan. If traders devise an efficient trading plan, complete with proper risk management, portfolio allocations, and rules for trading, and executed automatically with crypto trading software, they may find their trading plan cost-effective and never try impulsive trades again.
Random reinforcement has diverted the traders from their trading plan and has manipulated them into taking up impulsive, revenge-based trading. Therefore, understanding that markets are in constant flux is the key to earning profits.
The dangers of random reinforcement are best reflected in the 2017 crypto bubble.
Amateur traders started earning profits by trading in random cryptocurrencies and selling them after immediate yet massive gains. The bubble popped in 2018, and these amateur traders did not know how to deal with the meltdown. They held on to their assets until they lost everything.
A good crypto trader should determine whether a string of profits or losses can be attributed to their skill or their luck.
Perhaps the most significant bias in a financial market is chasing the trend. Humans always try to find a pattern, and when we find it, we act as if the trend will last in the foreseeable future. However, a study by the University of California shows that investors who base their decisions on past performances have the most unsatisfactory performances compared to the others.
The best remedy against chasing the trend is to be cautious of it; the market would exploit the trend way before the trader does, and it is more likely that the trader may make a trade when the trend is dying out.
Adopting the approach of Warren Buffett —buying when others fear and selling when the others are confident— can help a trader exploit an inefficiency. Although as a crypto trader, you have to remember that having a herd mentality does not guarantee huge returns.
So, as cheesy as it may be, never forget: The Trend is Your Friend but Only Until the End.
Who is a good crypto trader?
A good crypto trader is the one who has a well-developed plan with rules of entry, exit, stop loss, position-sizing, and risk, which are tested beforehand using paper trading or backtesting, and should never get out of their plan while trading.
No more than 1% of a trader’s portfolio should be risked on a single trade —as it helps sustain their consecutive losses— and should diversify their portfolio by engaging in hundreds of trades.
They should test their plan and tweak it over a long period.
A sound system gives a trader a long-term competitive advantage since randomness does not become a factor anymore because the trader has an extensive portfolio.
The returns do not determine a good trade it gives but by the trader’s ability to control every aspect of the trade within his control -planning the trade, trading the plan, and managing the risks. Developing a well-tested plan allows a trader to overcome random reinforcement, emotions, impulses and be profitable.
Gunbot Algo-Trading Software
Algo-trading or algorithmic trading are programs generated by a computer program that executes the trade —instead of a human trader— based on specific predefined rules. You can program the trading system with trading instructions as algorithms referring to variables like time, price, and volume. The computer then makes the trade according to the instructions programmed.
Minimum or no human intervention is needed to create the algorithm. Such algorithms —called zero-touch algorithms— are pre-entered into the crypto trading software, and once an opportunity is observed, the trade is made.
Application Programming Interfaces (API) is another type of algorithm that interacts with external software components. The user chooses the strategy to be implemented in particular scenarios, and the program is executed accordingly.
The API then executes the trade per the information it receives; that’s how it engages with the crypto trading software.
Crypto Trading Software Steps to Success
Algo-trading has to be followed to ensure the best returns; here are 4 basic ones.
- Strategy formulation: The user should have an effective strategy since it determines the winning potential of a trade. The traders use conventional strategies like mean reversal strategy or arbitrage strategy. However, they may also devise a strategy according to their preferences.
- Algorithm automation: Once the strategy is devised, it needs to be automated. After it is automated, it gets approved, and finally, the developer can implement it.
- Development of the crypto trading software: An advanced trading software —which is either built by the trader or bought from the developer— is required for Algo trading.
- Trading: The trader only has to wait and respond to the trading signals that the algorithm generates.
Crypto Trading Software Benefits.
Here are 5 Algo-trading advantages:
- Backtesting: An algorithm can be backtested by the user using historical data, which helps determine whether the strategy will work or not. Then the developer can tweak the strategy according to the results of the backtest and the user’s preferences.
- Increased speed for order entry: Trades are automatically processed in Algo-trading. The algorithm generates orders once it responds to the market changes. Since the crypto market is highly volatile, quick entry and exit are required to maximize profits and minimize losses.
- Diversification: As algorithms do trading, it is possible to implement multiple trades and multiple strategies simultaneously. The program can assess entire markets for trading opportunities, and the algorithm can implement orders.
- Preserving consistency and discipline: Algo-trading deals with market volatility and helps traders stay consistent, despite fluctuations in the market. The strategy’s rationality is upheld, and it does not succumb to emotions.
- Automating the asset selection process: Algo-trading helps systematize the selection of assets, executing orders, and entry and exit.
Crypto trading bots: How they help in cryptocurrency trading
Crypto trading bots are programs that automate trading in cryptocurrency on the trader’s behalf. The trader has to keep track of the market statistics and pick the cryptocurrency to buy or sell at a particular time.
The bots analyze and interpret the market statistics, calculate potential market risk, and execute cryptocurrency trade.
Different bots come with different prices and features. The user has to choose the crypto trading bot of his choice and download its code from the developer, possibly paying a user fee.
A trader must ensure that proper accounts are set up across digital currency exchanges and that these accounts have holdings in cryptocurrency in them. However, the user may still have to make trading decisions about buying and selling.
Most crypto trading bots have the following components:
- Market data analysis: The module saves raw market data, interprets it, and decides whether to trade in a particular cryptocurrency asset. The signal generator makes predictions and identifies trades based on indicators of technical analysis and market data. Users can customize the type of data sent to the signal generator sector, thereby refining the results.
- Market risk prediction: The module uses market data to calculate potential market risk and decides the amount to be invested. The bot distributes risk according to rules set up by the user.
- Buying/selling assets: The module uses API or WebSockets to buy cryptocurrency assets strategically. The bot’s execution module allows the user to make immediate purchases or avoid buying tokens in large numbers.
Arbitrage bots are among the most popular crypto trading bots, which examine crypto prices across digital exchanges and make trades accordingly by taking advantage of the variations. As cryptocurrency price varies across digital exchanges, bots that can move fast can take advantage of the delay in updating the cryptocurrency’s price.
Trend-trading bots try to maximize gains by analyzing the movement of an asset in a particular direction. Discerning the trends can help implemented stop-loss and take-profit provisions.
Gunbot Crypto Trading Software is preferred for the following reasons:
- Powerful: Bots can handle large volumes of data and arrive at insightful conclusions. On the other hand, a human trader has a limit in the amount of data that the bot can process, and even if it is processed, the conclusions may not be plausible. Crypto trading bots can be automated to run in the background at all times, allowing the user to stay updated on all developments in the crypto market.
- Efficient: Trading with a bot ensures that the user does not have to worry about human errors and delays. They can work round-the-clock and ensure better returns as long as they can receive the correct data and work on suitable algorithms. Bots can make split-second calculations and make objective decisions, irrespective of the market’s condition, which is why they make up to 99% of Wall Street’s trades.
- Emotionless: A crypto bot overcomes the barrier of emotion witnessed in a human trader since they are not driven by greed or fear. Though experienced traders can objectively make decisions most of the time, it may not be so for an amateur trader.
- Easy for amateurs: Crypto bots help amateur traders mimic the trading patterns of successful traders, utilize intuitive features and make it easy for themselves to enter the industry and learn the workings of cryptocurrency with minimum risk. Bots allow users, especially novice traders, to learn about the industry and research exciting cryptocurrencies. Users can also extract data from their bots to build a diverse portfolio.
- Increased market volumes: A large number of shares can be bought and sold in seconds using bots. Using bots allows the users to increase the overall market value, and using trading bots can increase liquidity, and the trading process becomes systematic.
Gunbot Crypto Trading Software Conclusion
Crypto Day Trading is a short-term investment where you may or may not hold your investment for the next day. We could call it continuous trading as the crypto market never sleeps.
You could be slow and swing or fast and scalp the 1-minute time frame several times a day with automated crypto trading software.
Most traders fail due to lack of knowledge, overconfidence, and most succumb to emotional trading based on Fear Of Missing Out (FOMO) or Fear Uncertainty and Doubt (FUD) instead of using a well-designed crypto trading strategy with a proper money risk management method set beforehand.
Do proper research so you don’t fall victim to “Bounded Rationality” and do not attribute your success or failure to “Random Reinforcement.”
Plan your trades and trade your plan, stick to a sound system that gives you a long-term competitive advantage with a high winning probability ratio, and stay away from randomness.
Gunbot is a cost-effective crypto trading software that can help you make sound investments. It’s designed to automate your trades, so it does the heavy lifting for you and doesn’t require any experience with coding or programming languages.
Plus, it provides traders who are less familiar with charts and graphs the opportunity to still use this automated tool by taking advantage of many included crypto trading plans without investing extra in learning how to create a winning crypto trading strategy.
Gunbot has been designed to be a straightforward and cost-effective way for newcomers to get started trading cryptocurrencies. It’s the perfect solution for crypto traders looking for an intuitive, user-friendly bot that will work on all major exchanges with just about any coin you can imagine.
You don’t need programming skills or knowledge of cryptocurrency markets to use this crypto trading software.
Are you ready to download the Best Automated Crypto trading software on the market today?
Don’t forget that once purchased; there are no recurring fees ever!
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