Trading in a bear market using a bot script: Is it profitable?
It is always very disturbing to watch a downturn in the market, and even the most optimistic trader can change his mindset in a pessimistic direction. However, it is not necessary to be in the red if the market has changed color to red — there are ways to make a profit even in a bear market.
To do this, you will need bots for cryptocurrency trading and a guide below that will help you understand the specifics of their details of their use. So, let's get started!
How can crypto bots Help in a bear market?
Those traders who do not have much experience in cryptocurrency trading usually view bear markets as a sign to stay away from cryptocurrencies until the hype settles down.
Nevertheless, there is a chance to make potential profits during both bullish and bearish cycles, but first you need to understand such features as what strategies you choose when using bots to trade cryptocurrency.
Buying on the market during a period of depreciation may pay off later, when the cycle unfolds and the charts turn green again. Of course, no one knows if this particular drop is the last one or if the price continues to fall further. In this case, you should build up positions over time, continuing to add new ones as prices fall, instead of going all-in just once. At the same time, you can take advantage every time the price reaches a new lower level.
Another common strategy that can help you when a bearish cycle starts is short trading. This principle means selling cryptocurrency at a high price and buying it back when the price reaches a new low.
So we've looked at the strategies, but what about the bots themselves? How can they help you?
A trading robot, TradeSanta supports both long and short strategies, which can be useful when the market is "bleeding", plus the number of tools already available is impressive.
Let's take a look at the ones that can help you during the bear cycle:
- Technical indicators. Traders can use the signals of the Bollinger Line, MACD or RSI to launch the bot.
- Stop loss and trailing stop. Whether you use a short or long strategy, a trailing stop or a trailing stop is a kind of trading order that is executed when the price no longer moves in your favor.
- Trading terminal. This tool allows you to trade on multiple exchanges with just one user-friendly interface. It is highly recommended for traders with multiple exchange accounts and those who want to apply different strategies on different accounts.
- TradingView signals and customized TradingView signals. These signals can be used to enter and stop a trade at the best time.
- Demo trading. This tool allows you to test the strategy in real market conditions without investing real funds.
- DCA and Grid strategies that can work with both long and short strategies at the same time.
The DCA and Grid strategies require a detailed description.
A bot configured to trade using the DCA strategy will first place the first buy order and additional (purchase) orders if the price goes against the expected trend. For all executed orders, the bot issues only one Take Profit order for all amounts of coins purchased by the bot.
When placing each new purchase order, the take profit price and the order volume are recalculated to get the desired profit for the entire amount of coins purchased.
A bot configured to trade using the GRID strategy places the first buy order in the same way as DCA. He will also place more orders if the price goes in an unfavorable direction. The main difference is how Grid makes a profit. Unlike DCA bots, the Grid bot places sell orders for each buy order separately with the specified take profit.
And yes, both of these strategies can be applied in case of price growth (bullish cycle) or fall (bearish cycle).
Cryptocurrency trading bots can be extremely useful in your trading routine. But it is important to understand that without knowledge of the basics, this tool will not help you in your crypto journey.
A cryptocurrency trading bot can become an effective tool in terms of saving time and nerves. Giving you the opportunity to monitor the market can ensure that you don't miss out on the perfect trade deal.
Also, let's be honest, crypto bots can trade hundreds of times faster than any professional trader, which gives you the advantage you need to make the most of this market. However, you should always remember that a bot is just a tool, and it is up to you to make it work successfully.