What are robot arbitrators and how does it work?
Arbitration and cryptocurrency
Cryptocurrency is listed as one of the biggest innovations on the internet. In this world, many possibilities can be considered, but arbitrage stands out, being basically the act of making a profit taking advantage of the spreads (price difference) between exchanges.
An example is: to buy Bitcoin on an Exchange A, to transfer it to Exchange B, then sell the Bitcoin and make the withdrawal to your bank account. Excluding the fees and commissions, it is possible to obtain an almost immediate profit from this type of transaction.
There is a huge variety of investments on the market, ready to be chosen. However, along with this, the question about how a person alone will do the research of each of the investments to define whether to invest the money. This is the scenario where robots arbitrators come in. They carry out negotiations automatically, without the need for human intervention.
For example, if a trader creates a strategy that can generate profits repeatedly, it won’t take hours in front of the computer to trade, after all, the robot is capable of making countless decisions. There is also no interference of emotions in the transactions made by arbitration robots, unlike the human brain. Arbitration robots are capable of repeatedly executing the same strategy over time.
Robots focused in diversified portfolio
In practice, a company with specialists that needs to create thousands of types of portfolios for different types of customers, obtaining better risk x return.
Various calculations are necessary to compose a diversified investment portfolio. In this case, the agile work of the robots comes in, automating the accounts and automatically saying how much of your money should go for each type of investment.
Robot to high frequency operations
In this case, the arbitration robot performs a high frequency of operations. They are feasible to be used in companies that promise a monthly income from their trades or arbitrage operations.
A trading robot automatically executes its operations 24 hours a day. Scheduled to execute only the best market opportunities for which it was scheduled, according to the knowledge of its developer in these indicators.
How to trust arbitrage robots?
To answer this question, it is necessary to know the type of robot used and the type of investment operated by it. There are several factors. The reliability of an arbitration robot surrounds these items: risk of operation, custody of funds and transparency.
If the company that owns the robot is in possession of your money, it is interesting to check the company’s transparency towards its customers.
It is important to ask where the history of operations is. Is it possible to clearly see information about the operations performed? How to know that the robot does exist?
The answers must be objective and positive, so that there is greater reliability in the company. Bearing in mind that there is still a risk that some operation will go wrong and cause losses for your investments and, consequently, for the company.
If the answers are elusive, it is likely that the company is applying some pyramid scheme, very common in this area of investments.
The truth is that there is no easy answer. The company’s reputation and the operations it is proposing to apply, history and transparency will always be the north. There is little care when leaving your money in the hands of a third party.
The advantages of using an arbitration robot
Arbitration robots work around the clock. It is possible to automate investment with robots and solve many pains as a trader. They can operate in the market 24 hours a day, 7 days a week, without breaks.
Another factor already mentioned, is the emotional. Any fluctuation of mood when monitoring prices and market instabilities can affect your actions, making you choose perhaps a decision that would not have been valid before. This does not happen with robots.
Transactions, whether inbound or outbound, are executed quickly, in a much shorter time than if they were done manually by the investor. The robot takes a few milliseconds to send, change and cancel several situations in the same second, acting without any setbacks when the pre-established scenarios present themselves.
Robots don’t get tired, they don’t sleep, and they are faster than any human being. It is not necessary to be 100% in front of the computer to avoid the risk of losing good buying and selling opportunities. They will be better used by robots, which operate at very high speed.
Reducing errors that may occur when carrying out operations is an important benefit as well, whether by reading a value in another way, or by having a problem with the computer, which makes you miss the amount in the orders, in an interpretation or the like, the chances going through it will be considerably reduced. This type of common human error does not occur with robots.
Cautions when using an arbitration robot
Robots help, but care is needed. Despite their important role in high-frequency trading, arbitrage robots are a tool to help traders, so they don’t miss out on interesting moments that the market can provide with good operations.
As much as they are considered facilitators, human accompaniment is essential. Arbitration robots perform the same operations that humans would do, but automatically and without their own autonomy. Parameters need to be drawn so that business doesn’t go wrong.
According to experts, an investment strategy that loses money will continue to lose money being executed by an arbitration robot or by a human being. In the financial market, the main obstacle is not to execute a strategy, but to know which one to execute. The same is true in the crypto asset market. Knowing which strategy to invest and execute is paramount.
How to choose an arbitration robot
We saw several reasons to invest in robots, however, as to which robot to choose it is extremely important to search for ready-made options available or find a company that develops, with expertise in the area.
As each company has different characteristics in relation to rates, minimum investment, assets in which the money is invested, among others, equal to the different attributes that also differ between robots, it is difficult for many to choose just one.
Before operating, it is worth carrying out tests and finding a platform for automation that is efficient, fast, online and, above all, safe for the investor to have access to the complete control panel on their trades.
It is important to emphasize that the function of an arbitration robot is to make life easier for the investor. They manage investments. According to the profile and objective, the portfolio will be set up to have maximum profitability.
It is not feasible to expect great results from free arbitration robots. It is necessary to understand about at least the basics of programming to operate them.
- Gekko: This Robot is free and has open source.
Exchanges: Binance, Poloniex, GDAX, Kraken, Bitfinex, Biitrex, CoinFalcon and Luno.
- Zenbot: Robot available for configuration and use. There are not many instructions for use about the program, if you are a beginner, it is recommended to study and research a lot before putting it into practice, to have help.
The monthly / annual plans for paid robots must be debited in cryptocurrency (most of them, quoted in Bitcoin). Therefore, it is important to opt for arbitrage robots that are linked to the largest number of exchanges possible, with a greater possibility of gains.
Before paying, downloading and starting using the robots, it is essential to check the minimum settings required for the software to run. Be careful not to buy a program that is not compatible with your computer or fall for fraud!
- Gunbot: A very famous robot among users of technology to trade.
Exchanges: Bittrex, Poloniex, Bitfinex, Binance, Huobi, Kucoin, Bleutrade, GDAX, Coinbase, CEX.IO, Kraken and Cryptopia.
- Cryptotrader: This robot is interesting because it works in the cloud, without the need to download software. This means that even if you turn off the computer, it will continue to perform the operations it is programmed for, without interruption.
Exchanges: Bitfinex, Bitstamp, Poloniex, Coinbase, Kraken, Bittrex, KCoin, Binance and Huobi.
- Haasbot: It can be considered an automated trading system for cryptocurrencies. Great reputation in communities.
Exchanges: Binance, BitMex, Coinbase, Deribit, Huobi, KuCoin and Poloniex.