Rebalancing bots: Emotionless traders keeping your portfolio zen and balanced
When you scroll through the collection of trading bots in the BOTS app, you see several types of trading bots. For example, we have bots that HODL, which means that they hold on to specific crypto for you, and rebalancing bots. This article will explain the latter category, what they do, and why they are good at what they do!
Keeping your crypto portfolio in perfect balance
As for many things in life, having a good balance is profitable. Eating balanced keeps you healthy, a good work/life balance is good for stress, and a good portfolio balance is good for your wallet. Before getting into balancing your portfolio, let’s talk about diversification. For almost all investors, diversification is key to a successful investment strategy. So instead of putting all your money in bitcoin and hoping for the best, you may want to explore all the other options the crypto market has to offer.
In other words, you may want to diversify your portfolio, meaning you own some bitcoin, some ethereum, and some cardano, for example. When bitcoin drops in price, ethereum may drop less while cardano may rise in value. As a result, the value of your portfolio may be more stable, and you can profit from the broader developments within the crypto industry. The tricky part is, however, to find the right balance. How much BTC should you own, and how much ETH? To make that a piece of cake, there are balancing bots that do this for you.
Balancing bots each have their strategies based on algorithms that these bots follow. The bots buy, sell, and hold crypto for you to keep your portfolio in perfect balance. So how does this work in practice? The visualization below will show you.
Why humans are not good at keeping their balance
While the visualization above may look simple, it often isn’t as straightforward. Aside from the fact that bots have much more complicated strategies than the one above, timing a sell or buy and calculating the balance of your portfolio can be tricky. It takes a lot of management, time, and also emotion will often cause you trouble.
Our slogan is “bots trade better than humans” because we have to deal with our emotions when trading. For example, when you see the market crash, you may feel like selling everything you own. But often, in hindsight, you realize this wasn’t the best thing to do. Unfortunately, we humans cannot turn off our emotions. Robots can, as they don’t feel anything at all (not yet, at least). So having a trading bot rebalancing your portfolio is an excellent way to actively invest in crypto without doing much yourself.
Each bot has its strategy based on its thresholds, indicators, and other factors. Read the bot’s description in our BOTS app carefully and decide your risk appetite and what kind of crypto’s you want your bot to trade. Once you have activated a trading bot, letting it do its thing is essential. Even when the market crashes, your trading bot will keep following its strategy and won’t panic.
BOTS is a tech company that has developed an app that makes it possible for anyone to start investing. You only need €50 to get started. BOTS uses automated trading strategies based on algorithms. We call these algorithms bots. These bots are tiny superheroes: they make automated investing accessible to everyone. With their help, you can invest in cryptocurrency within minutes — without any knowledge! And we’ll do you one better… In 2021, you’ll also be able to invest in stocks and other currencies through the BOTS app.
The app is free to download and quick and easy to install. BOTS currently operates in more than 15 countries, and by the end of the year, BOTS wants to be active in at least 60 countries and four continents.
Need any help with anything?
Even though automated investing is incredibly easy, you might need some time to find your way around the app and discover all the options. So if you still have questions wandering around your mind, or you just can’t seem to figure it out, please do not hesitate to contact the BOTS support department.
Don’t feel like calling our support team? Just head to the BOTS YouTube channel and browse through the dozens of instructional videos that may help you further. You are also royally invited to the BOTS Discord channel.
Ready to get started?
There is no such thing as risk-free trading. It is possible to lose (part of) your stake.