The thing about the future, where robotic super traders fight for micro moves in stock price, is that it’s already here. With access to algorithmic trading bots just a click away, we could witness the downfall of human investors and the triumph of artificial intelligence.
Algorithmic trading bots are programmed to buy and sell when they sense pre-programmed conditions and can execute just about any trading strategy. They have been used by professional traders for two decades, and these companies have also introduced them to the crypto markets.
Today, a new generation of accessible crypto trading tools has hit the market, designed for retail clients. I know, I’ve built several. Currently, I’m working on a system that helps newbie investors find their own risk preferences based on their previous trading and investing data.
The adoption of these bots could have an outsized impact on the crypto market in the future, given that retail accounts for up to a quarter of crypto trading volume. And what’s most interesting here is that it could signal a democratization of market access and participation.
If this is to happen, access to trading robots and other specialized tools should be combined with open education. Recreating the closed system where only “accredited” investors are allowed to access the crypto markets while everyone else is sidelined due to lack of education and capital is elitist and regressive.
It is unfortunate that financial education is not taught in schools, leaving many people at the mercy of sophisticated professionals and outright scam artists. Trading bots, combined with proper education, is a step towards leveling the playing field.
This technology offers a type of experience education for amateur traders, allowing them to feel market movements using small positions and an automated strategy. They can experiment with different robots to learn about different strategies such as arbitrage, dollar cost averaging, and futures.
Additionally, those who gain expertise in trading bots – for example, using multiple bots at once representing a hedged or diversified strategy – might outperform experienced players. After all, no human can continuously monitor the crypto markets 24/7, but a bot can.
In fact, trading bots thrive in the 24/7 crypto markets where they can seize arbitrage opportunities and ride the waves of high volatility. No human can keep up with these markets and will undoubtedly miss opportunities that a bot can take advantage of.
However, a trader still has to make crucial decisions that will affect a bot’s performance, such as choosing the asset and the price range for the bot to buy and sell. So, while robots are a great tool, they are not without risk.
The deeper traders understand entry and exit points and timing trades, the better they will set up their bots. However, most users don’t need expert-level knowledge – they just need to understand why setting up a long-term grid bot on a microcap that just pumped 200% is a bad idea. .
Another benefit is that bots take the emotion out of trading. Even professional traders find it difficult to maintain a calm, calculated mind with large sums of money at stake.
Some may end up “marrying their bags” and hold when they should sell. This type of behavior becomes “dumb money” – transactions that react emotionally to market fluctuations instead of the prevailing reason.
Trading robots do not suffer from this emotional handicap. They execute their strategies in a calculated vacuum. Newbie traders could find a lot of value in these instruments on their journey to becoming independent traders and investors.
It used to be that professional traders honed their skills on the job. But with the advent of AI trading, retail investors now have a chance to catch up. As the specter of inflation haunts major economies around the world, it is essential that the latest investment tools are available to all as a means of access and education so that ordinary people can better preserve their wealth and create economic opportunities.
Bill Xing is the Head of Financial Products at Bybit. Prior to joining Bybit, he co-founded Panda Analytics, a crypto trading indexing and automation company. He holds a master’s degree in financial engineering from the University of Illinois at Urbana-Champaign.
This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.