It is a common fact that Bitcoin is a very volatile instrument that can easily change its price for more than 30% within just a single day. This is why technical analysis, patterns and indicators are not always, or better to say, not often at all are useful for making trading decisions on Bitcoin.
You may of course employ technical analysis when it comes to intraday trading of Bitcoins and other cryptocurrencies but this is only applicable when the volatility is low. Otherwise you will not be engaging in trading but will simply be doing some Bitcoin gambling.
Cons of using BTC/USD robots
In most of the cases you one is taking part in the automated trading when he has already his strategy worked out. As the person progresses in mastering the strategy, it starts to make less and less sense to spend time in front of the PC as it simply becomes a routine. This is where automated trading comes handy, as it let’s the machine to simply take the same decisions as you would take. However, when it comes to BTC/USD, it is strongly required to actually monitor the charts as the price jumps quite a lot and you can just end up doing Bitcoin gambling when you leave trading decisions unattained.
Next to this, Bitcoin price can just slump heavily. This means that your stop loss will not work and you can lose a third of your account balance. Especially if you consider that usually a robot is designed to perform numerous trades a day that result in quite a modest return.
Another disadvantage of using robots for BTC/USD currency pair is that, unlike Forex pairs, it is heavily fluctuated by the demand and supply from the speculative traders. One trader that placed an order for 1000 BTC can easily change the current price for dozens of USD. In other words, the technical settings your robot will be quite messed up just when a relatively moderate trade (compared to FX volumes) is placed in the order book.
If you want to avoid Bitcoin gambling – simply stay away from using BTC/USD robots. However, is it a general rule? Not really, it only applies to the times of the high volatility.
Cons of using Bitcoin robots
After the previous paragraph you probably think that it is much better to engage into Bitcoin gambling games in a casino than to use a BTC/USD robot. Hold your horses. The good thing about using such trading robots is that your daily profits can be rather significant if the robot is setup right.
Usually, during the times of the low volatility, a price of Bitcoin can fluctuate some 1-5% within a day. This is rarely the case with the major FX currency pairs. Hence, when the volatility is low you can use a simple Bitcoin robot that opens a trade and closes it with just a minimum profit. When there is no volatility, you can always expect that the price will move some 0.3 or 0.5 USD up and this is a great potential for a Bitcoin robot. Simple find the appropriate daily average BTC/USD rate and code a robot that would go long when the price is below the average, then make it close the position with the desired profit, although try to make the gain smaller than 1 USD per BTC.