Which one is better: A crypto trading bot, or manual trading?
This might be your question, too. Today with the huge growth of crypto bots for trading cryptocurrencies, you may wonder which one is better to choose.
The people who trade manually, relish the control and intuition it offers. They analyze market trends, news, and charts to make informed decisions.
On the flip side, the tech-driven era introduced the concept of bot trading. Leveraging algorithms and real-time data, a crypto trading bot operates autonomously, executing trades based on pre-set parameters, ensuring efficiency and speed.
As we delve deeper into the intricacies of these methods, it’s evident that both have carved their niche in the ever-evolving tapestry of cryptocurrency trading.
also you might be interested What Are Crypto Trading Bots and How Do They Work?
Mechanics and Process
Below we have compared the AI crypto trading bots and manual trading in terms of mechanics and processes:
Crypto Trading Bots :
Crypto trading bots operate using predefined algorithms, settings, and tactics. Usually, they use their programming to determine whether to buy or sell cryptocurrency assets after analyzing market data like as price, volume, orders, and time.
Furthermore, because these bots are able to operate nonstop, they may take advantage of trading opportunities that may present themselves at any moment due to the unstable nature of the cryptocurrency market.
As long as trading bots are activated and operating correctly, they will automatically execute deals.
Any shortcomings or restrictions in the setup or design might result in transactions that are unsuccessful and perhaps loss of money on investment.
Manual Trading :
When a trader engages in manual trading, they actively participate in the market and make judgments using their intuition and research.
Technical and fundamental analysis are two analytical methods that manual traders use to guide their selections.
This procedure necessitates a substantial time investment, a thorough awareness of the market, and the capacity to analyze news and quickly adjust to changes.
Efficiency and Effectiveness
Below we have compared the AI crypto trading bots and manual trading in terms of efficiency and effectiveness:
Crypto Trading Bots :
In terms of efficiency, trading bots outperform manual trading in a number of ways.
Firstly, they can work around the clock. The cryptocurrency market, as you probably already know, never sleeps.
Trading bots, on the other hand, can monitor the market and execute trades at any time, ensuring you don’t miss out on any potential profit-making opportunities.
Secondly, because they use advanced technologies and algorithms, they can analyze market trends and patterns faster and more accurately than most humans can.
Finally, this level of efficiency can be especially useful when trading decisions need to be made quickly.
Manual Trading :
On the other hand, manual trading is less efficient in terms of the number of deals that can be completed quickly, but it does provide a greater grasp of market patterns and the flexibility to adjust to news and geopolitical events.
But keep in mind that success doesn’t necessarily follow from efficiency. It is necessary to weigh the possible disadvantages of deploying bots, such as the dangers posed by bugs and faults in the program.
Even though automation might save you time and effort, it shouldn’t be used as a replacement for studying and learning about the intricacies of the crypto market.
you might want to read AI vs Algorithmic Crypto Trading Bots
Risk Management
Clear guidelines for entry and exit locations, stop-loss orders, and position size may be programmed into your bot. By doing this, risk management is automated, and emotional judgments that can result in excessive losses are avoided.
Additionally, you may evaluate the performance of your bot’s risk management tactics under historical market situations by using backtesting.
This assists in identifying any flaws and improving your strategy before investing actual funds.
Bots obey the exact restrictions of your preset risk management and execute transactions with unyielding discipline. This removes the human propensity to stray from the plan out of fear or emotion.
Bots may be quite good at adhering to pre-programmed rules, but they may find it difficult to modify risk management plans in the event of unanticipated news or abrupt market collapses.
Manual Trading :
Human traders are able to respond quickly to shifts in the market and modify their risk-reduction plans accordingly.
This makes it possible to limit risk exposure more precisely in situations where markets are erratic.
You are in total control of your trades; you may change position sizes, set stop-loss orders, and close out deals as needed. This enables you to modify your risk management strategy in response to current market sentiment.
However, fear and greed can impair judgment, causing manual traders to ignore their risk control strategies. Retaining emotional control is essential to effective risk management.
It takes a lot of time and effort to manually modify risk management techniques and actively watch the market. Those with little time and resources may find this difficult.
Cost Implications
Crypto Trading Bots :
There are a few costs associated with using trading bots. Buying the bot, if it isn’t already free, is one of the initial cost elements; this can cost anything from tens to hundreds of dollars.
In addition, if you decide to customize your bot, you could have to pay for expert services.
Subscription fees, which can be paid monthly, quarterly, or annually, are one example of ongoing expenses. Trading bots may charge a part of the earnings made as well.
Manual Trading :
When it comes to the first money investment, manual trading is sometimes less costly.
Purchasing an automated system or paying for software subscriptions are not necessary.
This approach does come with a large non-monetary cost, though. For example, studying, monitoring, and making judgments in real-time might involve a significant time, energy, and emotional investment.
The true cost of manual trading should be taken into account and these variables should not be disregarded.
you can also read The Best AI Crypto Trading Bots You Need to Know
Flexibility and Control
Crypto Trading Bots :
While they are quite good at adhering to pre-programmed regulations, bots find it difficult to adjust to unexpected or abrupt changes in the market.
If the market behaves unpredictably, they risk losing money or missing out on lucrative chances.
Bots take emotions out of the picture, yet this has certain disadvantages as well. They are unable to respond to good news that might lead to an unexpected price increase.
You establish the entry and exit locations, stop-loss orders, and position size in advance, giving you complete control over the bot’s trading approach. But once they’re established, these parameters don’t change until you actively adjust them.
Manual Trading :
Real-time reactions and strategy adjustments are possible for human traders in response to changes in the market, news, and mood.
This makes it possible to take advantage of unanticipated chances and reduce losses during abrupt downturns.
Everything about the trade is entirely within your control, including the entry and exit locations and the ability to change position sizes in response to your research. This makes it possible to approach the market with greater complexity.
Future Trends
Crypto Trading Bots :
First of all, there is a rise in adaptive algorithm tactics. Bots that trade cryptocurrencies are probably going to get smarter, learning from shifting market circumstances and modifying their approach accordingly.
These sophisticated algorithms will be developed in large part thanks to AI technology, which will increase the effectiveness and efficiency of bots.
Manual Trading :
Peer-to-peer trading is becoming more and more popular among manual traders. Direct transactions between users are possible with this type of trade, negating the need for a middleman.
Compared to utilizing a bot, this might provide traders greater control and anonymity, but it also adds complexity and might take more time and effort.
Hybrid Approaches
Combining automatic and manual tactics allows many successful traders to make use of the advantages of both.
This hybrid strategy can combine the effectiveness of bot trading with the flexibility of human trading.
also read Different Types of Crypto Trading Bots
Security Concerns
Bots utilize API keys, which are effectively secure login credentials, to establish a connection with your Bitcoin exchange.
These keys might be used by a hacker to steal all of your cryptocurrency assets if they are stolen. Selecting a trustworthy bot provider with robust security features and adhering to secure API key management procedures are essential.
Naturally, a broken bot may make unwanted trades or forget to execute stop-loss orders, which could result in large losses. It is important to have backup plans and conduct routine monitoring.
Similar to any program, bots may include security holes that hackers might take advantage of. It is essential to use bots from reliable developers that have a track record of security.
Manual Trading
It is crucial that the crypto exchange you choose has enough security. Select a trustworthy exchange that has strong security features, such as two-factor authentication and safe storage procedures.
Phishing emails and websites that try to obtain your login information are frequently dangerous. When submitting your information on unknown websites or clicking on links, use caution at all times.
To avoid unwanted access, make sure all of your exchange accounts and manual trading instruments have strong, one-of-a-kind passwords.
Last thoughts
Using crypto trading bots or trading crypto currency manually, is a tough decision to make. Both of them provide you with important advantages.
Of course, each individual can realize which one is the best for them, according to their needs and goals.
All in all, if you feel like your emotions won’t let you make the right decision when trading, crypto trading bots are a good option for you.