Bots are a fundamental tool for retail investors

The thing about the future, where robotic super traders fight over micromovements in stock prices, is already here. With access to algorithmic trading bots just a click away, we could be seeing the fall of human investors and the triumph of artificial intelligence.

Algorithmic trading bots are programmed to buy and sell when they detect pre-programmed conditions and can execute virtually any trading strategy. They have been used by professional traders for two decades, and these companies have brought them to the crypto markets as well.

Now, a new generation of affordable cryptocurrency trading tools has hit the market, built with retail customers in mind. I know, I’ve built several of them. I am currently working on a system that helps neophyte investors find their own risk preferences based on their past trading and investment data.

The acceptance of these bots could have a huge impact on the future of the crypto market, given that retail accounts account for up to a quarter of crypto trading volume. And the most interesting thing here is that this could indicate a democratization in access and participation in the market.

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If this is to happen, then access to trading robots and other specialized tools must be combined with open education. Recreating the closed system where only “accredited” investors can access crypto markets while everyone else is marginalized 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 con artists. Bot trading, combined with proper education, is one step towards leveling the playing field.

This technology provides a type of experiential education for hobby traders, allowing them to feel the market movements using small positions and an automated strategy. They can experiment with different bots to learn about different strategies, such as arbitrage, dollar cost averaging, and futures trading.

Also, those who gain experience in bot trading, for example using multiple bots at once representing a hedged or diversified strategy, might outperform experienced players. After all, no human being can constantly monitor the crypto markets 24/7, but a bot can.

In fact, trading bots thrive in the 24/7 crypto markets where they can take advantage of arbitrage opportunities and ride waves of high volatility. No human being can keep up with these markets and you will undoubtedly miss out on 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 price range for the bot to buy and sell. So while bots are a great tool, they are not without risk.

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The more traders understand entry and exit points and trading timing, the better they will set up their bots. However, most users don’t need expert level knowledge, they just need to understand why it’s a bad idea to set up a long-term network bot on a micro cap that just pumped 200%.

Another advantage is that bots take the emotion out of trading. Even professional traders struggle to keep a cool and calculated mind with large sums of money at stake.

Some may end up “marrying their bags” and holding out when they should be selling. This type of behavior becomes “dumb money”: trading that emotionally reacts to market swings rather than reason prevailing.

Trading bots do not suffer from this emotional handicap. They execute their strategies in a calculated vacuum. Neophyte traders could find a lot of value in these instruments on their journey to becoming independent traders and investors.

Previously, professional traders honed their skills as part of a job. But with the advent of AI trading, retail investors now have a chance to catch up. With the specter of inflation looming large economies around the world, it is essential that the latest investment tools are available to everyone as a means of access and education so that ordinary people can better preserve their wealth and create opportunities. economic.

This article is for general information purposes and is not intended to be and should not be taken as 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.