Traders use diverse trading methods and techniques to profit from the cryptocurrency market. Typically, the technique chosen is the one with which the person is most familiar. It is best to consider several short-term and long-term plans to select the best technique. One short-term trading approach that has proven successful across various financial sectors is high-frequency trading, but is it the best crypto trading approach for you?
The financial trading industry has changed thanks to high-frequency trading (HFT) and cryptocurrency trading bots, which allow frictionless trading with little human involvement. This article provides detailed information for newcomers to HFT and cryptocurrency trading bots, the platforms that support them, and the importance of these tools in the modern trading environment.
What is High Frequency Trading?
High-frequency trading (HFT) is a type of trading where a high number of trades are analyzed and carried out quickly, typically in a matter of seconds. Profiting from slight price discrepancies in the market is the aim. Every time they trade, the traders make a small profit and want to accumulate larger profits over time.
Humans cannot operate at the speed required for HFT because you would need to open and close numerous deals in seconds to make short-term gains. To monitor and implement signals, professionals prefer employing algorithmic technology. Faster algorithms have an advantage over slower ones when trading.
Advantages of High-Frequency Trading
- Trading automation and speed: You won’t need to manually open and close the trades. Instead, the entire procedure is automated, increasing your trades’ effectiveness. The algorithm does all the work so that you can guarantee greater effectiveness and a complete lack of emotional involvement in your trades.
- Brings about market liquidity: Since it frequently involves numerous trades, high-frequency trading can enhance market conditions. It also keeps the market’s liquidity flowing continuously, supporting tight ask and bid prices.
Best High-Frequency Trading Platforms
With several platforms offering high-frequency trading, here are a few that have distinguished themselves over time.
- QuantHouse: This platform offers whole-system trading solutions. This includes order routing services, proximity hosting, ultra-low latency market data technologies, and an algo-trading programming platform.
- AlgoTrader: This platform offers all the everyday operational requirements required by a standard quantitative hedge fund. It is particularly renowned for its strengths in quantitative research, risk management, backtesting, and model validation.
- FlexTade: FlexTrade Systems provides a multi-asset trading platform for stocks, currencies, options, futures, and fixed income. It caters to both sell-side and buy-side organizations, including asset managers, investment banks, broker-dealers, hedge funds, and commodity trading advisors.
Crypto Trading bots
These computer programs autonomously buy and sell different cryptocurrencies when the price is correct. Their objective is to make money for the user while ensuring the effectiveness and efficiency of the trading process.
Money is time. Additionally, bots move thousands of transactions across numerous time zones and markets almost instantly, performing millions of computations simultaneously. Trades take place in a split second, much faster than a single trader can do.
With the numerous crypto trading bots available, choosing one that fits your need can be challenging. For newbies, here are a few bots to try.
- 3Commas: 3Commas provides an intuitive trading terminal with smart features. It offers several features, such as portfolio management and tracking, trading robots, and a marketplace where users may buy and sell trading signals.
- Gunbot: Gunbot is a trading bot that may be completely customized. It works with several cryptocurrency exchanges, including Binance, Bittrex, Poloniex, Bitfinex, GDAX, and Kraken. Numerous features, such as pre-built trading strategies, adaptable trading techniques, and a variable time planner, are available.
- Cryptohopper: A cloud-based cryptocurrency trading bot compatible with several exchanges and cryptocurrencies is called Cryptohopper. It is simple to use and comes with tools for automatic trading, building trading strategies, and backtesting.
Conclusion
The HFT trading style is not suitable for novices and is not a game. Before attempting any algorithmic or automatic trading, we advise those new to trading to start by making manual transactions. However, choosing automated tactics could be a fantastic option for those who don’t have the time to trade.