Cryptocurrencies

Automated Trading Platforms Can Dominate the Crypto Trading Landscape With Proper Troubleshooting

By Sebastian Ganjali, head of International Strategy at Kryll.io

Cryptocurrency trading across centralized and decentralized exchanges reached new heights during the bull run of 2021, with centralized exchanges recording $14 trillion in trading volume, a sharp rise of 689% from 2020, and decentralized exchanges recording $1 trillion in trading volume, rising steeply by 858% from 2020. And yet, no matter how many people do it, trading isn’t easy. 

Amateurs often don’t have the understanding necessary to book profits, instead finding themselves suffering losses — and experienced traders, despite having multiple strategies up their sleeves, sometimes lack enough liquidity to generate optimal returns. To bridge these gaps, developers are now innovating automated trading platforms that bring the crypto traders’ community closer to ensure a seamless trading experience.

Automated trading has been around for some time now in the realm of legacy financial markets. For example, in 2019, automated algorithms handled nearly 70% of all trades on EBS. This allows beginners to participate in active trading while at the same time gathering valuable experience. Moreover, because algorithms execute trades independently, traders have more time to focus on other aspects of their business and lives with the added bonus of removing their emotions from the trading equation. 

Considering that nearly 90 million people traded cryptocurrencies in March 2022 despite the ongoing bearish slump, the demand for automated crypto trading is pretty evident. However, the existing solution set is problematic in its ways. Thus, one must make sure to understand the problem thoroughly before promising solutions. 

Is Automated Trading Flawless? – Not Really

Backtesting is common in automated systems. It allows traders to test trading strategies before implementing them in live markets. But most existing algorithmic crypto trading platforms charge a fee for this critical service, or put a cap on the number of free backtests. In addition, lapses like faulty backtesting or over-optimization create gaps between theory and practice—traders get exceptional results on paper, but with little resemblance to those of real markets. 

Over-dependence on automated trading also causes saturation. This happens when most users use the same strategies, primarily because existing protocols offer a limited set of strategies with limited customizability. And the greater the similarity of strategies, the lesser the chances of executing profitable trades. Thus, a lack of creativity and innovative trading strategies is ultimately detrimental to crypto trading overall.

In order for automated trading systems to optimize trading profits, users require a sound knowledge of the cryptocurrency market. But this puts amateurs at a disadvantage—particularly when they lack special training beforehand. To avoid discrimination, then, it’s necessary to enable new traders to learn from the mature ones through mutually beneficial means. This, in the long run, will compound earnings for both parties.         

Crypto Trading Needs Efficient Automation

Solutions for efficient crypto trading automation are emerging, steadily rather than slowly. Leveraging Web3 and blockchain technology, innovators now strive to make algorithmic crypto trading more user-friendly and cost-efficient. This is necessary for broad adoption in this domain, since it creates lower entry barriers to crypto trading for prospective amateurs.

Drag ’n Drop editors which don’t require any coding skills can help amateurs gain hands-on experience by trying things out for themselves. I think Automation with a code-free tool is the best way for traders to enter the space..

Backtesting is necessary not only for traders, but also for the crypto industry in general. It is at least the first step in weeding out inefficient or malicious trading strategies that weigh markets down unnecessarily. If traders are able to fine-tune their strategies to perfection, this will pave the way for sustainable competitive trading markets in crypto. And to this end, traders can leverage historical data to backtest their strategies adequately prior to entering actual markets for profits. 

Innovation Trumps Saturation, Strengthens Community Orientation

Instead of being prescriptive, emergent algorithmic crypto trading platforms foster innovative strategies and trading practices in a competitive ecosystem. This counters the possibility of saturation, delaying its onset if at all. The more prominent aspect of these new-age ecosystems, however, is that of bringing amateur and experienced traders closer and forming a globally distributed community. 

Kryll, for one, has developed a custom-built marketplace to help traders collaborate and exchange ideas peer-to-peer, enabling further innovation and novel revenue streams. Here on this marketplace, experienced traders can monetize their knowledge, selling or renting their trading strategies to amateurs. Traders no longer have to remain glued to their computer screens or monitor trading algorithms, which practically defeats the whole purpose.

Lastly, the two-fold process of learning through experience and interaction is highly significant in the current bear market scenario. If crypto trading is to overcome the current low phase, it must ease the entry and execution for potential traders. Therefore, it is necessary to provide efficient services at low costs. Together, these factors can help the crypto trading industry expand to serve a billion-strong community by the end of 2022. And once that happens, crypto’s trading volume will indeed soar well over its previous records from 2021. 

About the author:

Since originally launching its ICO in 2018, Kryll.io has seen more than $4 billion traded using automated strategies available on its platform. Users have nearly 300 verified strategies to copy trades from, and the platform recently surpassed 100,000 registered users. Kryll offers a professional marketplace and a community of experienced traders who are ready to offer their insights about individual investments and market conditions as a whole. According to recent internal research, 74% of Kryll.io's trading strategies have either generated profits or outperformed simply hodling, even in the recent crypto bear market.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.