High risk bot versus low risk bot
I'm Simon, a comedian and so-called crypto hobbyist. And just like you, I'm learning about trading as I go. In these videos, I do my very best to tell you as much as I can about trading apps, cryptocurrency, starting with trading, and much, much more.
When you enter the world of investing, you choose your strategy, whether it’s high or low risk. But what are the pros and cons of both high and low-risk trading? Let’s look into the risk levels of algorithmic trading strategies and discover which risk level might suit you.
Sit back, relax and enjoy the story!
Trading with algorithms
The BOTS app uses algorithms to do the trading for you. These automated trading strategies are developed by professional traders and have only one goal: generate as much profit as possible. Most likely the same goal as you had in mind — right? So there you are, you’re ready to invest your first €50. But are you going for a low-risk bot, or will you dare to invest in a high-risk bot?
Let’s first take high and low-risk bot trading under the spyglass. If you’re entirely new to trading and the stock market, it makes sense to start with low risks and slowly test the waters before you dive in and go for the risky trades. But how do you know how low the risk is?
How risky is automated trading?
Well, it’s relatively simple. First, every bot in the BOTS app reflects its risk level — low or high. Obviously, the bots with a low risk level come with a more negligible risk of losing your investment. But there’s more to look out for when it comes to choosing the right risk level. Each bot in the BOTS app trades with its own base asset. A base asset is like your safe haven: it’s where your bots will withdraw to when the market is panicking.
Now, if your base asset would be Bitcoin, and the market’s fluctuating like mad — your investment will do the same. On the other hand, have you invested in a bot with the US Dollar as its base asset? In this scenario, your investment will most likely stay stable throughout the withdrawal period.
Making a lot of money quickly by trading
But will a higher risk bot make you more money in a shorter amount of time? Perhaps. Even though no bot will be able to make you a millionaire overnight, high-risk bots do often offer the possibility of high returns. On the other hand, high-risk bots also come with a higher risk of losing all or part of your investment.
So what’s the right pick for you? That entirely depends on your current situation. Your lifestyle, the vastness of your savings account and the capacity you have to rebuild your savings in case of a significant loss. Older investors in the BOTS app often invest more considerable sums into low-risk bots, as they have fewer opportunities to rebuild their savings in case of significant losses. Young investors in the app seem to prefer quick investments in high-risk bots. They often have less patience and more opportunities to deal with possible losses.
Minimize risks by spreading your investment
Can’t take your pick? The BOTS app allows you to invest in as many bots as you like. So say you have €500 to divide, you can divide this over both low risk and high-risk bots. Spreading your investment means spreading the risk! If one low-risk bot loses his part of your investments, you still have the rest of your team working on picking up his slack!
Would you like to learn more about the BOTS app or get some more trading in cryptocurrency tips? Just continue reading below.
See you soon!
There is no such thing as risk-free trading. It is possible to lose (part of) your stake.