TWAP Bitcoin Algorithm Makes Trading Easier During Volatile Periods

Bitcoin is of great appeal to investors and traders all over the world. However, the price volatility is also turning away a lot of potential users, including consumers and investors. The new Time Weighted Average Price Bitcoin trading algorithm may help relieve some of those concerns. That being said, it is not an ideal solution for everyone.

What the Time Weighted Average Price algorithm does is allow users to save money and headaches when dealing with Bitcoin. Albeit the volatile price swings seem to have become less common, one can never rest on their laurels either. This new algorithm lets users benchmark their trades, and reduce the risk factor.

Not everyone will be looking to improve their trading performance, though. TWAP Seems to be targeting those users primarily, as it provides Bitcoin price benchmarks. Then again, such a tool could be useful for retailers as well. Not every merchant will convert the full Bitcoin payment to fiat currency right away.

TWAP Is Not For Everyone

Once people gain valuable insights into the volatile nature of Bitcoin through a convenient manner, they can determine when it makes sense to hold Bitcoin. At the same time, this will still require those users to be able to trade when the information becomes available. After all, the objective is to be able to trade at the new prices for maximal revenue gains.

Some people may be wondering how powerful this solution can be. So far, the algorithm seems to do its job without a hitch. During both high and low volatility, TWAP can hold its own without many issues. Getting the average Bitcoin price at any given moment is very easy, which is what this algorithm is designed to provide.

One thing to take into account is how this solution will not turn everyone into a successful Bitcoin trader overnight. Algorithms such as TWAP can only provide so much information to let users make the best decisions. However, it remains up to the individual to execute trades and even ignore TWAP results if their gut instinct tells them a better Bitcoin price may be coming soon.

Moreover, if everyone starts using this algorithm to trade Bitcoin, its effects will diminish over time.  Buying or selling Bitcoin at an average price is the safe option, but not necessarily the one with the highest reward. In the end, Bitcoin remains a free market, and algorithms analysing the Bitcoin price will only do so much to provide useful insights.

Header image courtesy of Shutterstock

About JP Buntinx

JP is a freelance copywriter and SEO writer who is passionate about various topics. The majority of his work focuses on Bitcoin, blockchain, and financial technology. He is contributing to major news sites all over the world, including NewsBTC, The Merkle, Samsung Insights, and TransferGo.