What is a market correction and how should investors position against it?
The correction process refers to a rapid price drop that traders can turn to their advantage with the help of cryptocurrency trading bots.
Although the definition of a correction varies, it is generally used to describe a rapid decline in an asset's price of at least 10 to 20 percent. If an asset falls more than that, the price drop is classified as a market crash.
Corrections are usually the result of a minor event such as low trading volumes or other technical factors. Therefore, they occur on a fairly regular basis, lasting several days, weeks, and in some cases months. The term "correction" is used as the price will usually return to its expected value. However, the alternative may also be correct. A correction could lead to a bigger drop, a bear market.
As most people know, price volatility is high in the cryptocurrency market. It is common for prices to move up and down on a regular basis.
Looking at 2021 alone, the cryptocurrency market has undergone four market corrections.
That's why analysts advise investors to buy assets "when everyone else is selling" and describe the process as a "great buying opportunity".
The main concern here is that it is difficult to determine when a fix may occur. Therefore, crypto trading bots can play an important role in helping traders determine when to buy and sell using signals and indicators and not miss opportunities when they are not on the screen.
What should investors consider when using an automated crypto trading bot during the correction process?
Cryptocurrency trading bots set emotions aside, but are not completely freelance. Therefore, it should be implemented along with a carefully thought-out strategy.
Emotions come to the fore in the correction process. Although these events are expected, investors may fear and act quickly and take a trade that is not in their best interest. For these reasons, a cryptocurrency trading bot can come in handy, as transactions are logical and remove emotions from the equation.
However, in order to successfully implement the crypto trading bot, traders must first choose the most profitable option for themselves. Although it is up to the investor to choose, the decision-making process does not end there.
Trading bots are designed to follow a set of rules. That's why it doesn't always work perfectly in the face of an unpredictable market. As a result, a carefully crafted strategy is required for an automated trading bot. Programming errors can also affect crypto bots. For this reason, traders should be extremely careful when determining the bot's actions or their own rules from scratch.
Investors; In order to achieve success with an automated bot, they must clarify their goals, be patient and trust their systems. They should know that success is not possible overnight.
What approach and strategy should investors consider when using automated solutions?
Automated trading strategies, including the dollar and cost averaging (DCA) bot and reversal strategy, can help users turn the market correction to their advantage.
A reversal strategy is used, based on the idea that rates will return to an average value after a certain point in time, as the price is expected to return to normal. In practice, this strategy sets the upper and lower price limit. The algorithm then processes orders when the price exceeds the normal range.
This strategy is useful when prices reach new highs or lows. Thus, investors can profit from trends in the market. When using a cryptocurrency trading bot with this strategy, traders should be mindful that prices will not reverse as quickly as expected.
How to auto trade during correction times?
Investors who want to take advantage of automatic trading should first choose a platform, determine their strategy and start implementing it.
With the popularity of automated trading platforms, users now have many options designed for both new and experienced traders.
HafizeBot is a cryptocurrency trading bot used in the cryptocurrency industry that allows users to take advantage of automated trading strategies. Trades are executed according to market movements based on machine learned neural network with access to DCA and grid strategies, in addition to more features such as stop loss.