A correction refers to a rapid decline in price, which traders can use to their advantage with the help of cryptocurrency trading bots.
Although the definition of a correction is different, it is most often used to describe a rapid decline in the price of an asset, typically of at least 10% and up to 20%. If an asset falls more than that, the price decline is classified as a market decline.
Corrections are often the result of a minor event such as low trading volumes or other technical factors. Therefore, it occurs quite regularly and lasts for a few days, weeks and in some cases months. The term correction is then used as the price will often return to its expected value. However, the alternative may also be true. A correction can lead to a bigger drop, a bear market.
As most know, the cryptocurrency market is defined by its volatility, so it is normal for prices to go up and down quite regularly.
Looking at the year 2021 alone, the cryptocurrency market was subject to four market corrections and one other market event.
Therefore, analysts will also recommend market corrections as a great opportunity for investors to buy assets “on sale”.
The main concern here is that it can be difficult to determine when a correction might occur. For this reason, crypto trading bots can play a crucial role in helping traders determine when to buy and sell using signals and indicators and also not to miss that moment while away from the screen.