Approaching the cryptocurrency industry as a trader requires a unique mindset. Moreover, one has to stomach volatility, time trades correctly, and get used to markets that operate on a 24/7 basis. Nevertheless, algo trading is a powerful trend in the crypto industry, and there are many benefits to exploring this option.
What Is Algo Trading Exactly?
Trading cryptocurrencies can be done either manually or through automated solutions. However, the manual approach is very time-consuming and requires tremendous research into coins, projects, market sentiment, and so forth. On the other hand, an automated system takes away most of the research aspect and helps users automate their trading strategies.
Automated trading involves strategies derived from algorithms. These algorithms are put together by the developer of the automated solution and can sometimes be enhanced by machine learning. As the algorithm makes more traders, it learns from previous mistakes and adjusts its market approach accordingly. That trial-and-error approach can cost trades a fair bit of money, although it usually yields some profit in the long run.
Finding the right algo trading solution is crucial for making a profit. Analyzing traders regularly is essential to determining whether the software, bot, or platform meets your expectations. If there is little or no profit, it might be wise to move on to a different solution. Various providers support algo trading for cryptocurrencies these days, although every solution is a bit different from the next.
The Benefits Of Algo Trading
Traders flock to algo trading for various reasons. There are certain advantages one can unlock through automated solutions. Although manual trading and research remain a viable approach in 2022 and beyond, it never hurts to gauge the impact of using an algorithmic trading solution on one’s profits and losses. Benefits of automated trading include:
- Support for hundreds of currencies and markets
- Support multiple trading platforms through one interface provides a more streamlined experience.
- Simultaneous trading across different markets and platforms
- Exchange and margin trading integration
- A much higher trading rate increasing the chances of pocketing a profit
- More aggressive trading strategies (e.g. scalping)
There are many ways to achieve algo trading today. Solutions range from trading bots to DeFi bots, market prediction software, and dedicated platforms like Yearn.finance. All of these concepts are fully automated and have proven valuable to thousands of traders and enthusiasts worldwide. However, there is still much room for improvement, and the next generation of algo trading will prove to be even more robust.
Going One Step Further: Market Assessment
While all of the bots, market prediction tools, and dedicated fully automated trading protocols are powerful, they often lack the assessment aspect. It is crucial to evaluate the overall performance and approach of an algo trading solution and adjust where necessary. Solutions like HyperDex have that assessing system and allow the platform to adapt quickly to changing market conditions.
Crypto assets are notoriously volatile. Market sentiment can switch from bearish to bullish and vice versa in the blink of an eye. If your algo trading solution cannot properly assess the shifting conditions, profits will be impacted. HyperDex aims to solve that aspect through its quick and progressive solution capable of adjusting parameters when market behavior changes.
The algo-trading Cubes on HyperDEX rely on a purely statistical arbitrage algorithm. These Cubes are designed to offer traders a higher return by analyzing market discrepancies affecting highly liquid crypto assets. The proprietary algorithm has been battle-tested for several years and ensures fully automated trade execution.
It is equally possible to upgrade a Cube into a HyperCube to increase returns. HyperCubes provide higher returns and additional rewards through HYP tokens. Upgrading requires staking an equivalent amount of HYP tokens to the original investment. An intriguing opportunity one cannot find on other platforms supporting algo trading today.
Closing Thoughts
It is great to see the algo trading industry grow and evolve. Making it easier for users to achieve a profit is always appealing. The use of a proprietary algorithm that properly assesses market conditions and their changes creates a competitive edge over other market solutions.
Additionally, the option to upgrade one’s earnings is rather interesting. It is not mandatory to do so, but giving traders more options is never bad. HyperDex introduces some new aspects to automated trading that were not possible before.
