With cryptocurrency trading recently rising in popularity, more and more people are showing an interest towards this segment. This is especially true in the case of automated bots, which make it easier to buy and sell crypto without much human intervention.
This notion of automatically buying and selling cryptocurrency makes this subset even more lucrative to those who want to generate profit without setting aside extra time from their busy days. In other words, it’s very appealing to those people who want to benefit from passive income.
That’s why, if you are looking to check how effective are trading bots in generating profit passively, then you are not alone.
But the answer to that question is more nuanced than you may think at first. To help you understand it in a detailed manner here is a very realistic look at auto trading and its approach to passive earnings generation.
What is Passive Income for You?
It refers to the profit generated by investments that do not require the investor to perform any activities on a regular basis. Instead, it can generate consistent income with minimal intervention.
To many people, passive earnings come in the form of real estate, savings accounts, or limited partnerships. This way, they don’t have to do anything but invest their money to get consistent profits in return.
But there’s a clear difference in revenue that’s generated through these mediums, and the profit that’s derived through cryptocurrency bots.
Simply put, automated tools cannot actually generate passive income without some time and effort invested into them. This means that if you are turning towards cryptocurrency trading platforms, you will have to bring more than just your money to the table.
Why Trading Bot Cannot Bring 100% Passive Income?
No matter if you are trading in stock or cryptocurrency, any bot will require you to manage it regularly in order to be profitable.
It is because using a bot only makes your job of trading assets easier. It is not a magical solution to buy and sell assets completely on its own. But it is a tool that should be managed to deliver optimal results. Otherwise, it can keep running on the same strategy that you set up at the start, and cause you to actually lose money down the line.
Look at it this way: While a bot can analyze the market, it needs proper instructions to make use of its assessments accurately. It can buy and sell cryptocurrencies to make a profit, but it can only transact in trading pairs that you ask it to trade in. Similarly, while it can follow a set strategy and provide income for a few days, it cannot continue on that path forever.
Sooner or later, you need to intervene into your bot’s operations to check its performance and make the required adjustments accordingly. If you just let the algorithm run without any direction, it is going to get derailed due to fluctuating market conditions.
That’s why it is essential that you check on your automated tool on a regular basis. It doesn’t have to be a daily check. You can do it every few days. But the fact remains that this prevents bot trading from being termed as a complete passive earning mechanism.
Why Are the Bots Called Automatic If They Cannot Work on Their Own?
It is a good question and one that stems from complete logic. Here, it is important to understand that these bots do make automated deals and do not require manual approval before buying and selling cryptocurrencies. But as defined above, they cannot decide on factors such as the selection of trading pairs and when to stop a strategy on their own.
Using a bot still allows you to trade 24/7, with the script buying and selling the selected cryptocurrencies on its own. But you still need to monitor the process and make some interactions with the system from time to time.
What If a Platform Offers a 100% Autonomous Trading Service?
Remember, using a crypto bot is different than handing money to a fund manager. As opposed to a human wealth manager, the bot platform is automated and doesn’t act on human thought processes until your input is involved.
That’s why, if you have found a service that offers you a daily profit while asking for no efforts from your end, then it is most likely a scam.
It is because there is no trading bot in the world that will ask you to never check your account or make adjustments, especially in a market as volatile as cryptocurrency. If any service promises to turn a profit without any intervention, it is most likely out to get your money and not return any income whatsoever.
How Often Should I Adjust My Bots?
For best results, you should monitor your bots on a daily basis. This gives you complete control over how your algorithm is behaving, while also keeping you updated on the progress.
If you are too busy for a daily check, then you can check your bot every other day. In fact, you still have a chance to make a profit if you check it once per week. But the less time you spend on management, the worse results you will get.
That is why it is extremely important that you simply check on your bot as often as you can. It is helpful to remember here that you don’t need to make adjustments every time you check your algorithm running.
In some cases, a regular check of statistics is all you need. But there may be times when changes are required every few days. Even then, you will only have to dedicate a few minutes out of your day to make the necessary modifications and run your bot on a path of consistent profits.
While the required check and balance on cryptocurrency bots doesn’t make them a strong contender of generating passive income, they are very beneficial when it comes to turning a profit if you put some time towards managing them.
With a little investment of your time along with your money and some targeted knowledge of trading processes, you can use bots to your advantage quite easily.
That is why, if you think you can take a little time out of your schedule every day, then investing into a crypto bot might prove to be worth it. Just make sure that you are checking for detailed information on cryptocurrency mechanisms, as that will help you get the most out of your trading strategies.