Crypto Trade Analyzer Tool: Simulation before Execution

Introduction

Crypto market offers abundant opportunities to multiply your investment manifold. On CoinMarketCap, you see many coins rising stupendously every day. Yet, most of the people end up losing even their own investment. This apparently seems paradoxical, but when you look into the matter, the reasons become clear. Most of the investors do not do proper research before diving into the market. When they start trading, they do not compare the prices, fee structures and slippage factor. Trade Analyzer is a very useful tool that combines many features to let you simulate your trading experience before you actually plunge into it.

Crypto Trade Analyzer Tool

From the nomenclature, it looks as if the tool were something to help traders perform technical or fundamental analysis. But this is not the case. Trade Analyzer tool is in fact a program that tracks, compares and interprets a desired set of trading data to show potential profits or loss in a targeted trade. It also compares trading costs across selected exchanges.

Trading fees and slippage affect your gains from a trade. The analyzer tool also takes into account these factors to show the actual gains or losses. Regardless of the fact whether you are a beginner or a professional trader, you can use the tool to the best results.

Significance of Trade Analyzer Tool

Arbitrage Trading

A beginner might think that crypto tokens have universal prices, and they are exactly the same on any exchange they consider for trading. Nothing can be farther from truth than such an assumption. In fact, there is a special technical term used to describe the difference between prices of the same token across different exchanges. It is called “arbitrage spread” and the type of trading that exploits this difference is called arbitrage trading. Trade Analyzer Tool can be very helpful in such trading. You can view the real time order books on your screen and bring the difference to your best use.

Order Book Depth

In addition, the tool is highly useful in analysis of order books and liquidity. You can buy and sell easily on an exchange with high liquidity. Your transaction on an exchange is not with the exchange owners. It is with other traders who have put orders there. For example, your sell orders will be fulfilled only when there is a buyer for your tokens. On small exchanges, it is relatively difficult to trade due to low liquidity. Trade Analyzer Tool reveals the required depth of the order book for the coin you select.

Fees

Trading fee is yet another factor that necessitates the use of Trade Analyzer Tool. Fees are something that can mask your actual gains and losses from a trade. There is a maker fee and a taker fee. The role of maker refers to the trader who provides liquidity to the market by placing an order in the order book. The one who removes the liquidity by fulfilling the order is the taker. Maker pays less than the taker by default on every exchange. Trade Analyzer Tool. assumes your role as a taker and shows you the fees accordingly.

Slippage

When you place an order to buy $BTC at $87,000, but your order is fulfilled at $87,500, you are likely to miss the exact gains you had visualized. This phenomenon is called slippage. Trade Analyzer Tool provides information regarding the chances of slippage on every exchange.

How Crypto Trade Analyzer Works

The Crypto Trade Analyzer combines live market data, exchange fee structures and user preferences to give you an estimate of the real cost of executing a trade on the supported exchanges. Its purpose is to show the effective price, what a trader would actually pay or receive after considering fees and slippage. Precisely, we can explain tool’s working in 4 steps. First of all, it collects real-time market data from the platforms you select in the uppermost part of the displayed window.

Then, it becomes a simulator for you. You can execute a trade as you do a paper trade. It shows you exactly what would happen if you tried to open a trade right now. It goes through the best bid and ask prices. A volume-weighted average price (VWAP) shows how much trading activity impacts costs, revealing the difference between the quoted price and actual execution price for sizable orders.

The third step is really important as it show you the real profit or loss when fees are taken out. Its importance arises from the fact that anyone can compare prices, but the fees are hidden parts of the deal. Exchanges have special maker taker fee levels and discounts depending on the token you trade. Finally, you might notice a “best” tag on the top left corner on any one of the exchanges you have selected. The tag appears in terms of the effective price after deducting fees and slippage and the tool automatically ranks exchanges in this respect.

User Tips

Crypto market is extremely volatile. Despite all the usefulness of Trade Analyzer Tool, your results from the actual trade might differ from the ones shown by the tool. It is advisable to know its limitations when using it as a guideline or as simulation.

You must enter the size of the trade exactly corresponding to the trade you want to take. For example, if you have only $2000 to invest, do not enter 1 whole $BTC to analyze the market data because the slippage and fee factors will increase accordingly.

Do not forget to refresh the exchange data every time you put a new trading pair. This is because fee structure token-based discounts can vary across exchanges.

As mentioned earlier, the fee structures are displayed from the takers’ point of view when you want to buy or sell on the current market price. When you place an order and provide liquidity to the market, the fees change.

Finally, USD conversion depends on external sources as values are also shown in USD using third-party pricing. Brief discrepancies are possible during rapid moves or outages.

Conclusion

In short, Trade Analyzer Tool is great at executing a simulation trade from which you can get a comprehensive estimate of what you can expect. It collects data and compares it on all exchanges to give you the best possible platform in terms of price, liquidity, fee structure and slippage.