What is a cryptocurrency options trading bot?

ByOllie
stock-market-gc3d63854f_640-5b26e24e

With options, you can protect yourself from losses and make money regardless of whether markets go up or down. In this article we will discuss how to use this tool in your trading strategy and look into the ways to create options trading bot, that will look after your holdings on autopilot. 

How options trading work?

The option is an agreement to buy or sell any cryptocurrency at a pre-agreed price in a certain period. With it, an investor can hedge the risk that selected coins will go in the wrong direction. In addition, options can help make money no matter which way the markets go.

Options can be used not only for cryptocurrency but also for any asset which is traded on an exchange. 

The buyer of an option gets the opportunity to buy or sell the asset, but may not take advantage of this opportunity and not make a deal until the end of the contract period. That is the difference from a futures contract, where the seller and the buyer are obliged to complete the deal according to the terms of the contract.

  • If at the moment of the expiration date of the contract the price of a coin has changed to the favourable side for the owner of the derivative, he can exercise his right to buy the asset. For example, if a trader bought an option on Bitcoin for $20,000 and Bitcoin went up even more (to $21,000, for example), the trader would buy the crypto at $20,000 and make a profit of $1,000.

  • If the value of the asset changes in the opposite direction, the transaction is cancelled. The option ends without the transfer of the cryptocurrency.

When purchasing an option, the buyer pays the seller a commission (premium) – a monetary consideration for the right to buy or sell the asset under the option contract. It puts in its value the risk of an unfavorable change in the price of the asset.

Trading Bots for Binary Options

What does bot mean in options trading? This is a special program for making options trades. Their algorithm is based on the systematization of available information about the behavior of a financial asset and the evaluation of potential risks. Options trading robot compares all data and calculates the ideal moments for market entry, which will bring maximum profitability with a low percentage of loss.

By the principle of action they are divided into two types:

Semi-automatic – they monitor changes in quotations and supply the trader with signals to open positions. The trader analyzes the information received and decides whether to open a deal or not. The disadvantage of the semi-automatic system is that traders must always be near the trading terminal, timely open deals and close losing positions.

Automatic – robots for options that trade independently. This is a good way of passive income. All the trader needs to do is go to the computer once or twice a day and start the process. The bot for options trading will open trades and the trader will record the financial result of the trade.

However, it should be remembered that no one, not even software, can predict the movement of quotes with 100% accuracy. The trader is always responsible for any decision.

There are hundreds of free and paid options trading apps available on the internet. However, not all of them should be trusted, because there is always a risk of running into scammers who will withdraw money from your trading account, leaving you with big losses. 

Always use software from trusted providers only. One of them is WunderTrading – a platform for automated trading. 

With its many unique features, this platform does its best to provide convenience and automation to its users. WunderTrading is aimed at both beginners and professional traders because of its simplicity and abundance of features.

Setting up the best options trading bot on WunderTrading is not difficult, even a novice trader can cope with it. Options trading software will analyze the markets and the prospect of falling or rising of a particular coin according to the parameters, and then create an option contract for the most profitable of them. 

You can use the WunderTrading options trading bot for free. All you need to do is register on the platform and open a trading account. 

In addition to working with options, WunderTrading offers a wide range of other tools. For example, if you’re not confident in your abilities to use option bots, try a copy trading strategy. You won’t have to make your own trading decisions – an experienced trader will do it for you, allowing you to copy his deals. As a result, you will get the same trading results as he does.