Crypto is a volatile market and known for frequent market corrections. The price of cryptocurrencies can drop based on a variety of factors including bad news, sell-off, or lack of investors’ interest. As a result, traders are always anxious about making the right decisions at the right time. However, emotions can get in the way and ruin your portfolio especially in the event of a crypto market correction.
What is a Market Correction?
The market corrections are different from the dip. When a market falls 10% or 20% due to low trading volume, sudden movement of assets, or some other technical factor. If the market plunges beyond this point then it is recognized as a market crash.
Market corrections last a few days or a few weeks. After that, the assets’ price returns to the original/expected value. Nevertheless, there have been instances when market correction turned into a bear market. So, investors need to do their research before determining the pattern in price fluctuation.
The volatile nature of virtual assets means that their value can increase or decrease regularly. Market corrections are the best opportunity to purchase a currency at a low price. It is safe to buy huge chunks because you know that the market is going to come back up.
The best way to profit from crypto market corrections is through trading bots.
Crypto Trading Bots and Market Corrections
Crypto trading bots take emotions out of the equation. They execute trades based on the market signals. Moreover, cloud-based bots work 24/7 without a running system. Hence you don’t miss any opportunity while away from the screen.
There are four bot strategies that can help you earn profits during crypto market corrections.
Strategy No. 1
Crypto trading bots have a built-in strategy of stop-loss. This strategy gives traders a chance to decide for themselves how much loss they are willing to take.
Let’s say you buy an asset at $40 during correction while its original value is around $50. Now you want to sell it when the price reverses to the original position. However, the market is unpredictable and you fear that the asset’s price might further drop. In order to protect yourself against the downtrend, you can put a stop loss at $25. This means that the trade will be sold if the price hits that point. You will not incur any losses if the price keeps dropping beyond that point.
Crypto trading bots manage stop-loss on their own after analyzing the market. It can buy the coin/asset at a lower point and sell upon reversal earning profit for the traders.
Strategy No. 2
The second strategy is DCA or Dollar Cost Averaging. It is the savior for spot traders. DCA allows traders to take advantage of market corrections.
Crypto trading bots make use of DCA for accumulation purposes. The strategy involves purchasing assets at multiple points if the price keeps dropping. This provides a hedge against volatility. Moreover, the bot sells the asset when the price is back to normal.
Strategy No. 3
Another strategy for making a profit via market correction is the reversion strategy. It is also built on pre-disposition that price will return back to a mean value after drop.
The bot defines the upper and lower price limits of the asset. It then executes the trades when the price surpasses the normal range.
Best Automated Trading Bot
Automated Trading Bots are becoming increasingly common in crypto trading markets. There are a variety of platforms offering algorithmic trading based on strategies like grid trading, copy trading, or accumulation. According to this author, Digiebot beats them all as the best crypto trading software of all time.
Digiebot is an algorithmic trading bot with built-in strategies for accumulation, stop-loss, and take profit. Digie has both fully automated and semi-automated modes that allow traders more control over their trades. You can tweak strategies to take maximum benefit from the market fluctuation.
The Crypto market faced 4 market corrections in 2021. Digiebot users managed to take profit in the corrections with the help of the bot’s up-to-date algorithms. Digiebot employs algorithms that do:
- Fundamental Analysis
- Technical Analysis
- Sentiment Analysis
It gives the bot users an edge over the rest of the investors. Thus, Digie users can stay ahead of the curve with algorithmic crypto trading.
Crypto trading bots can prove beneficial during market corrections. However, you need to choose them wisely. Trading with bots involves patience and understanding. They cannot make you rich overnight. You need to pick a trustworthy platform that aligns with your personality and technical sense. After that, wait for the bot to implement its strategies for your benefit.
Crypto trading is a risky business. The past performance of a bot is no guarantee of future results. Don’t invest the money which you cannot afford to lose.