Algorithmic Versus Manual Trading - Advantages and Disadvantages
Sat Jul 08 2023
In this article we'll be looking at the main difference between algorithmic and manual trading. Each have their own pros and cons, but is there a clear winner? Read more.
Algorithmic cryptocurrency trading can have significant advantages over manual trading, however, it’s important to understand that these two are not mutually exclusive. More often than not, you will be manually trading a strategy before delegating it to a trading bot using an algorithmic cryptocurrency trading platform such as Aesir.
Manual Trading vs. Automated Trading At a Glance
The reality is that Manual and algorithmic trading usually complement each other. Algorithmic trading at its core, is a series of pre-determined rules that a trading bot will continuously perform. However, determining the parameters of these rules is normally your job as a trader.
This can be done the traditional way, by starting off with manual trading small amounts, and once you have a winning set of parameters, you can safely automate your strategy. However, you could do away with the manual part of the process if the trading platform you’re using offers advanced testing tools such as Paper Trading.
Paper Trading allows you to see how you crypto trading bot would perform on the live market, by placing fake orders with virtual currency, so there’s no risk associated with running an untested strategy.
Algorithmic Trading Benefits
Algorithmic trading offers a range of benefits for traders, which can help maximize gains on existing manual strategies or discover brand new strategies that might not be possible to implement with manual trading. Trading bots are programmed to analyze various factors such as indicators, price moves, and price history. By leveraging these algorithms, traders can make data-driven decisions and execute trades with precision. Algorithmic trading eliminates the emotional aspect of trading, allowing for consistent and objective decision-making.
To get started with algorithmic trading, you need a reliable platform that offers sophisticated trading bots. Platforms such as Aesir provide a range of tools and features to help you automate your trading strategies. These platforms offer a trading bot marketplace where you can choose from a variety of algorithms created by bot providers. You can customize parameters such as the maximum number of active deals, base trade size, and more to tailor the bot to your specific trading strategy.
While it’s also possible to code your own cryptocurrency trading bots from scratch using Python, or a different programming language, these are usually complex systems with many moving parts, so for a quick start you might want to consider the ease of use that an Algorithmic cryptocurrency trading platform like Aesir can bring.
The Importance of Adaptability
The cryptocurrency market is constantly evolving, and trading strategies must be adjusted accordingly. Whether it’s global changes like asset correlations or local changes like volatility adjustments, traders need to stay adaptable. Even the most effective trading bot may lose its effectiveness over time due to unforeseen market changes. Therefore, it’s crucial to regularly review and adjust your trading strategies to stay ahead of the game.
Conclusion
Algorithmic cryptocurrency trading is a powerful tool that can revolutionize your trading experience when used correctly. By leveraging the capabilities of trading bots and algorithmic trading platforms, you can automate your trading strategies and maximize your profits. Remember, no program can replace the expertise of a skilled trader, so it’s important to continuously analyze the market and adapt your strategies accordingly. Start your journey as an algorithmic trader today and unlock the full potential of cryptocurrency trading.
The best way to learn is by doing so just sign up to Aesir and test your strategies with our powerful paper trading mode!