Trading in the cryptocurrency market requires a significant amount of your day. Unlike traditional financial markets that operate 5 days a week for certain hours of the day, the cryptocurrency market is open 24 hours a day, 7 days a week.
Therefore, to trade in the cryptocurrency market, you need to allocate a significant amount of your day, but this is a luxury not available to everyone. That’s why the Binance platform offers many options that enable you to invest in the market in an organized manner without wasting your precious time.
In this article, I will explain the auto trading feature or Auto Invest.
What is auto trading?
Auto trading is a feature on the Binance platform that uses a popular investment strategy in all financial markets, which is Dollar Cost Averaging or simply DCA.
The idea behind the DCA strategy is that instead of entering your full capital into a stock or cryptocurrency in a single deal at a certain price, your entry is through several deals at different prices.
The goal of this strategy is that your chances of catching the bottom of a particular coin are low, so it's better for you to divide your capital across multiple prices so that your average entry is good in the long term.
You might think that the DCA strategy, due to its simplicity, is ineffective or not used, but the largest institutions in the cryptocurrency market, such as MicroStrategy, have been following this strategy since 2020 until now. The value of the company's investments in Bitcoin, which it made through dozens of deals over these years, has reached 499,000 Bitcoin at an average price of $66,000, while the current price of Bitcoin is $85,000.
How do you use auto trading on the Binance platform?
The Binance platform allows you to auto trade using the DCA strategy through the Auto Invest service.
You can use this feature through the following steps:
From the homepage, look for Auto Invest.
Choose the currency you want to invest in.
Specify the amount you wish to enter in each deal.
Specify the duration you want the deal to repeat. You can choose to have auto trading daily, weekly, or monthly, and you can specify the time of the purchase process you want.
For example, if you have $1000 and want to invest it over a month in Bitcoin, all you need to do is:
Choosing Bitcoin.
Setting the purchase amount to $250.
Determining the frequency period weekly, and choosing the day and time, such as Saturday at 1 PM.
Thus, every Saturday at 1 PM, Binance will automatically buy Bitcoin on your behalf and deposit it directly into your account balance without any intervention from you.
Is auto trading profitable?
There is no strategy guaranteed to be 100%, but in my opinion, if your investment goal is long-term, then auto trading through the DCA strategy will be suitable for you. But the most important thing is to determine when to start the DCA strategy, as this is the most crucial decision in investing.
It's better not to start a DCA strategy during a Bull Run phase, which is when coins reach their peaks, so that your average entry is not high in the long run.
Additionally, in my opinion, do not use the DCA strategy on coins you do not believe will be successful in the long term. In other words, it's not logical to enter a DCA strategy in a meme coin!
You should choose a coin that you see has a long future in the market.