The app will execute trades quickly, as each second counts when making a trade based only on complex algorithms and not emotions. As such, all professionals should incorporate the use of a Bitcoin Trader App in their trading arsenal.
A trading software directly interacts with financial exchanges by using their API to source information relevant to market changes, prices, etc., and place buy or sell orders on your behalf based on the market data it collected and your inputted strategy.
Even though the crypto market is still young in comparison to forex markets, the rapid development of technology has permitted the integration of algorithmic trading into bitcoin trading apps, enabling investors to use a plethora of trading strategies. The two most popular strategies implemented at the moment are:
One of the most basic strategies applied to bitcoin trading is arbitrage. Arbitrage means buying BTC in one market and then selling the coins in another for a higher price, with the difference resulting in profit for you.
As a majority of cryptocurrency exchanges are decentralized, you can often come across large price discrepancies, which allow traders to make profits by using arbitrage.
Even if some of these price gaps have been reduced over time, there are still moments when such large price differences appear, and you have to make the most in those few seconds to profit from arbitrage.
In such conditions, a bitcoin trading app would be able to quickly identify the market price difference, place the trades, and allow you to benefit from the executed arbitrage strategy.
The market making strategy is another popular trading strategy that involves the “continuous buy and sell prices on a variety of spot digital currencies and digital currency derivatives contracts,” so that it can catch the difference between the buy and sell price.
This strategy requires placing both buy and sell limit orders, which are close to the current market range. When the price fluctuates, your trading software will automatically and continuously place limit orders, so it can make profits from the spread between those price differences.
Of course, there are plenty of other strategies that can be used to make a profit on the Bitcoin market through a trading app. That’s why it is better to choose a trading app or software that is more advanced and has multiple trading combinations and options.
Featured image: bitcoin.com
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