On Sunday, July 25, leading crypto trading platforms FTX and Binance announced a sharp decline in their trading leverage cap to 20 times on each investor’s bet. Before this, FTX had offered a leverage cap of 101 times, and Binance offered 125 times.
For an investor trading with $100, their potential win would go from $10,100 and $12,500, respectively, to $2,000. This option was apparently taken as a result of high-risk gamble-like trading strategies adopted by several crypto investors.
For many crypto holders, the initial goal for investing in this type of asset moved from the interest in the rise and fall of the currency’s value to betting on prediction for the future value of the underlying asset. This trading method referred to as “high risk” has been linked to the drastic rise in crypto inflations.
It was also linked to the global crash in May, when over $20 billion of these allegedly high-risk bets were liquidated from top crypto trading platforms. Typically, trading sites offer leverage leaves to investors to enable them to trade.
This potentially risky option increases an investor’s profit or loss times the leverage cap they take. Generally, this offer is open only to larger investors with enough collateral to back up their risk.
However, May’s global crash reportedly happened because several small-scale investors were able to work their way into getting higher leverage leaves in the hope of a favorable earning when the price of bitcoin and other major cryptocurrencies goes according to their expectations.
But with crypto prices dropping due to various economic factors, several small-scale investors with large leverage leaves suffered a great loss. This led major crypto platforms to liquidate what was salvageable of these accounts, before their trading position became too high for their collateral.
What does this mean for investors?
For many investors, this high leverage was a great way to earn quick money, without spending a lot of time on the platform. With this new change, a lot of redirections would need to be made.
Although welcomed by many crypto experts as a great way to reduce crypto inflation and high-risk trading, this change will mean that investors cannot make as much quick money as they had hoped from future value predictions.
As a result, more interest will be channeled to trading on the rise and fall of crypto value. For both new and old investors, this would mean more attention to day trading to earn as much as they would have.
This could be a major problem, since many investors were not day traders, and the transition might seem more daunting and time-consuming.
Day trading with bots
As a solution, however, traders have two options. The first is to find larger trader investors and invest through them. This seems fine enough until the topic of investor fees comes into play. The second option would be to utilize automated cryptocurrency trading tools.
In the era of technical progress and an investment option built on technology of artificial intelligence and big data analytics, trading bots are no surprise. In recent days, several trading bots have been used by investors to take up the task of day trading.
These AI bots are automated investment tools that can analyze, monitor, and trade cryptocurrencies on behalf of the user. Their software notes even the slightest changes in crypto values and prompts it to trade to your benefit.
With the help of accumulated data, detailed interpretation, and fast calculations, the bot can accurately predict and understand the market risk level and sometimes even protect your investments from a sudden trend reverse.
These bots are also built to be user-friendly, allowing investors to customize their trading strategies within a predetermined value margin. They can also trade 24/7, which means that bot owner never has to miss out on the next big market opportunity.
This option eliminates the need for investors to manually execute each trade while assuring all operations performed in an accurate and timely manner. With so much to benefit from day trading, having a properly tuned ever-ready trading bot can immensely increase profit margin even from the smallest market fluctuations.
Options available for traders
Two things stand out in favor of automated trading: its cost-effective operation coupled with accuracy and there are several options available to traders, each with different unique features.
This allows investors to choose the best entry point, buy the dip, and attempt to make more returns using such options like impeccable grid trading algorithms combined with advanced analytical tools.
Deciding on the best, however, is dependent on what each investor is looking for – an advanced instrument for generating high daily returns or a source of passive income.