Introduction
With prices fluctuating dramatically even in the space of seconds and minutes, crypto currencies are known for being volatile. Today, crypto currencies have become a global phenomenon known to everyone. Crypto currencies are digital and use cryptography for secured online transactions. The most popular cryptocurrencies are: Bitcoin, Ethereum, Ripple, Litecoin, Monero, Binance Coin etc.
While crypto currency can be used to buy goods, much of the interest in these unregulated currencies is to trade them for profit. As the mainstream popularity of crypto trading grows, more and more people are looking for the ways to get into these casually. Today, crypto currencies have exploded in popularity and, more and more people are trading them.
Crypto trading bots have become a hot topic these days for millions of crypto currency users across the world. If you are also looking for the ways to automate their strategy to outperform the crypto trading market, trading bots will be of great help.
Trading cryptocurrencies
Unlike the stock exchange market, crypto currency trading market never stops or sleeps. Yes! The traditional stock exchange market would closes each day to let people home, crypto trading exchanges never close for business. It works 24×7 with no days off, no vacations, nothing. Investors have the opportunity to take part in crypto trading at any hour of a day.
At first, trading crypto currencies may feel very exciting and each morning may feel like a new adventure. But trading crypto currencies is a time-consuming and life-consuming process. Soon, everything changes and you will find yourself wide-eyed at 4 am trying to perfectly time the exact moment to enter next position before heading off to bed. It‘s the time that hits in mind- there is a problem.
Combining the above factors limit the effectiveness of the human crypto trading in many ways. And, that’s when most traders move to automated trading bots.
What are automated trading bots?
Automated trading bots isn’t particularly a new concept as automated trading has been used in many markets. What automated trading systems allow traders is to create a playbook with relation to the entry and exits of the trades. In US stock exchange, 70-80% of the trades are executed in this way only.
Just like stock exchange market, automated trading bots are gaining huge popularity in crypto currency market. One of the main reasons is due to the higher and well-known volatility and risks found in crypto currency markets.
An intro to crypto trading bots
Crypto trading bots generally trades automatically on your behalf based on information such as price movements, and generating a reaction based on the pre-defined set criteria. Instead of manually entering each trade, the trading bot is able to access data from the users’ crypto trading exchange account and place trades automatically.
Trading bots are the programs which use certain algorithm and scripts to analyze and recognize the trends in market. Thus, by making use of information gathered, they generate both buy and sell orders for users. These bots will make decisions looking at certain facts like market volume, time, prices and more.
The strategies which crypto trading bots implement can do anything from trading to construct the custom indexing strategies to advanced real-time arbitrage. The possibilities are endless and the trading bot implements a strategy which relies on algorithms created by the developers.
Example:
Let’s understand bot trading with an example:
Mr. John decides that he wants to try using automated bot strategies to secure crypto profits and to grow his Bitcoin holdings. So, he invests in any crypto trading bot software to earn profit. He decides to capitalize on the daily Bitcoin movements and after setting up the bot on his exchange of choice, he decides on a trigger which the trading bot script will act on.
After looking at the chart, he is sure that Bitcoin will at least be trading rather being flat and then he sets the bot to buy it when the price drops down to 2% and sets it to sell when price goes up by 2%.
Now, the trading bot knows the rules and its’ ready to start trading. Mr. John heads off to his other work and the script at bot start trading. Later during the day, Mr. John check how things are doing and sees that the bot’s trading strategy is amazing.
This is how it starts to work!
How crypto trading bots really work?
Investors can subscribe to free bot programs to aid in crypto currency trading. On the other hand, there are many crypto bots which charge user fees, and some of which are quite steep. Typically, investors seek out the bots which are most successful for them. Each trading bot have different requirements in terms of hardware and software.
Crypto trading bots work by accessing the data on the exchange for any user. Crypto currency trading bots act based on the predefined rules and pre-defined program. The user can provide access to the trading bot by giving their API public and API private key. The core purpose of crypto trading bots is to automate the trading actions that are too complex, time-consuming and difficult to execute manually. The sophistication of these tasks varies from automating a single trading strategy to routing the trades smartly and intelligently.
Without much effort, some smart crypto bots let users implement a portfolio management strategy saving huge amount of time. Yes, bots can take control to execute on your implemented strategy day and night instead of requiring you to be online constantly.
Benefits that are driving the popularity of crypto trading bots
Using crypto trading bots have become the latest trend in crypto currencies. In today’s digital market space, there is no denying that crypto currency is one of the most lucrative investment opportunities which is why an increasing number of investors are choosing automated trading bot technology to make the exchange process more efficient.
Here are the key benefits of crypto trading bots driving the popularity this technology:
Bots make it easier to enter the crypto currency industry
We all know that entering the crypto currency field and then making profits from trading is a very exhaustive process. New and aspiring traders have to do a lot of research and learn the in and outs before trading. Even with such research and preparation, there is no guarantee of the long-term success. A trading bot also cannot guarantee the success but it may surely up your chances to earn profits.
But yes, crypto trading bots may help the new traders copy the actions of successful crypto traders, minimize the risks, automates the process of trading and learn how crypto trading works. So, choosing a crypto bot is a wise decision for those who wish to step into the world of crypto trading.
Trading bots are time-efficient
The most important thing that every trader finds out about crypto trading market is that crypto currency is a full-time gig. If you want to make profits and the right trading decisions at the right time, you have to monitor the latest and current market trends and insights on minute to minute basis. And, this is what the expert traders do as they know the time-consuming nature of this job.
However, as modern crypto trading keeps highlighting the use of trading bots, one can actually limit its time to spend on monitoring the industry fluctuate and automate the process. One can also optimize the bot to notify all the changes and latest statistics which further help them to make better decisions.
Trading bots ensure efficiency
We, Humans can only be fast at making calculated decisions and working without losing focus. Ask any experienced trader, and they will tell you how time-consuming this process is and requires a lot of experience, knowledge, efforts and fast-thinking to make right calculations. With a crypto trading bot, one can limit his time to spend on the system and let it do the entire tough work for you.
Bots are extremely efficient and make split-second calculations which may make or break the trade. So, this shows how valuable trading bots are to this field. They will save your precious time. No matter what are the conditions of market, bots can make calculated decisions.
Lets you learn about the industry while making profits
Trading bots are the excellent learning tool for the novice traders. While it is making extra money for you, you can learn about the industry in the mean time, researching about the crypto currencies you are interested in and also extract some knowledge from the bot to learn how to build a thriving portfolio. This will let the trader gain a deep knowledge and understanding of the market.
24-hour trading
One of the key advantages of crypto trading bots is its smart time management. Simply, it will allow you to sleep, taking care of other tasks and let’s to live a life outside crypto game. With a crypto trading bot, you can automate the trading process to run in background while performing other tasks without taking break. This will let you make the right trades at the right time.
So, if you are planning to invest in crypto currency exchange, be sure to leverage bot technology for long-term success. Or, if you are a part-time crypto currency trader or you are unable to stay on the top of the market at all times, then crypto trading bots will be of great help and allows you to trade efficiently without dedicating hours to market analysis. Now, you understand how beneficial it is to use crypto bots and it’s time to find out the best trading bot!
How to choose the best crypto trading bot?
Using trading bots, traders can control over all their trading activities as the bots will keep working even when they sleep. Moreover, using a bot will help trades to be executed quickly and efficiently. Choosing the right crypto trading bot is important. In market, you will find numerous bots available, some are there for free and downloadable, but there are others available at a flat fee.
But no one can be sure which are reliable and trustworthy. It requires some research and analysis to find out the right crypto trading bot. The most important factors to consider when looking for the best crypto trading bots are:
- Aim for a transparent team: Transparency is what makes the crypto currency stand out. This is the first most important thing traders worry about when using crypto bots for the first time. As you are trusting on a software program to manage your crypto trading tasks 24×7 and if you choose a bot from an unreliable team, you are putting your hard-earned finances on risk.
A good trading bot company will be fully transparent about all its tasks and services, and the way it handles your personal data. It is always important for a trader to check all the details and conduct a thorough research before you commit to a bot. Reviews from other users are also valuable.
- Reliability: Trust is always a major factor when choosing any service or product. Any company providing trading bots should be trustworthy and their software must ensure reliable performance. A simple issue in connectivity or function may cause you to miss out any opportunities to earn profits, which is unacceptable when it comes to choosing the crypto bot. The best companies offering crypto trading bots perform extensive testing on their bots to ensure higher standard of services.
- It should not be only for experts: Choose the trading bot which is tailored as per the requirements of the wide range of traders, and not just for the experienced ones. The right software is always welcoming for the beginners and easy to set up without having must knowledge.
- Ensures great and satisfactory user experience: A good user experience is must in any type of software and crypto trading bots are no different in this case. An intuitive interface along with a user-friendly design combines to make the automated trading process easier.
- Security level: It is always important to look out the security set-up of any trading bot you are trying, for your peace of mind. Crypto currency takes security seriously and keeps the user’s funds safe. But hackers may still attempt to breach it and so, it’s important to choose a bot ensuring sufficient security.
- Profitability: Investing a crypto trading bot is all about earning profits. Otherwise, what’s the use of investing in a crypto bot? An effective bot is designed to help traders achieve profits and success. For this, one may check out the reviews from other traders, both positive and negative to make the right decision.
Choose the companies that deliver high-quality software ensuring people to build up consistent gains. There are different types of bots available in market, let’s understand them first.
Main types of bots
A trading bot interacts directly with exchanges and place selling or purchasing orders on your behalf. A bot analyzes market actions such as orders, volume, price, and timing. The different types of bots available are built on buy and sell strategies, and are common in both crypto currency and traditional markets. Main types of bots are:
- Trend trading bots
- Coin lending bots
- Market making bots
- Arbitrage bots
Trend trading bots
As the name suggests, this kind of bot takes into account the momentum of a particular asset and after analyzing it executes buy or sell orders. If the trend is price upsurge, the bot will enter a long position and if the price drops, it will enter into the short position. And, to determine the trend, bots can use price action or other technical indicators like momentum, moving averages, charts, trend lines etc. While setting a new bot, you might add technical indicators which will be further used by bot.
Coin lending bots
One of the most amazing ways to earn in crypto currencies is to lend coins to margin traders who will return this loan later with percentage. The exchanges like Poloniex and Bitfinex have the option of margin funding. Coin lending bots let you automate the process, spend lesser time and taking advantage of possible spikes in lending options. While setting up this kind of bot, one can configure their strategy, withhold lending until the interest rate reaches some threshold, choosing a current as well as setting a date when you want your coins back.
Arbitrage bots
This type of bot utilizes the arbitrage concept which exploits an imbalance in price in different markets or forms. With such imbalance, one can profit simultaneously while selling and purchasing. These bots are programmed to track the difference between the prices of coin in different markets. With this, later you can buy the coin at lower price and sell it when it is higher.
Market maker bots
Market making bots places several buying and selling orders to net in a quick profit. The more actively any asset is traded, the wider will be the spread and later the more profits, market maker bot will return. The main principle of this bot is to sell to investors at a higher value than the selling price. This bot places an order with a price that is different from market price, and thus, let you earn profits.
Top trending bots of 2020
- Cryptohopper: This is one of the most established players in the automated trading for several reasons. The bot helps users to simplify the process of trading crypto currencies and assist them to earn profit margins while minimizing the losses. This platform focuses on automated bot and copy trading. Cryptohopper is supported on a number of popular crypto currency exchanges including:
- Binance
- Bitfinex
- Cryptopia
- Huobi
- Kucoin
- Kraken
- Coinbase Pro
- Poloneix
It’s a cloud based platform requiring no installation and allowing 24×7 trading. The company has created the Hopper Academy which is actually a video library to educate users on this platform. The entire user interface is easy to navigate. This bot integrates with traders who share their signals and allowing users to assign their bot according to these signals. One of the best things about Cryptohopper is that it is beginner-friendly as compared to other bots available in market.
- 3Commas: This is an advanced trading bot with a number of sophisticated trading options built in. Some of the key features of this advanced trading platform are that it allows traders to automatically copy the trades of successful traders. This helps new users to trade successfully. They work round the clock and help with a variety of trading strategies including longing and shorting. 3Commas supports integration with different crypto currency exchanges such as:
- Binance
- Bittrex
- Bitfinex
- Poloneix
- HitBTC
- Coinbase Pro
- Huobi
- Yobit
- GDAX
- OKex
- Bitstamp
- Kucoin
It also allows free trial to its users so that they can perform this platform and see if it is a right one or not.
- Shrimpy: This is the leading crypto trading bot platform that focuses on portfolio strategies such as rebalancing. It allows users to configure a crypto asset portfolio, specifying the percentage weightage of coin’s value, and set it to be rebalanced automatically at a specified or set time. This is the perfect platform for both novice and the advanced traders. It offers a robust backtesting tool that evaluates market using precise order book data. This is the most highly regarded automated trading service in the market. Exchanges it supports are:
- KuCoin
- HitBTC
- OKEx
- Binance
- Bittrex
- Coinbase Pro
- BitMart
- Bitstamp
- BitFinex
- Growlonix: Best crypto trading terminal and bot enabling users to trade like a professional day trader. Having added benefit of signal automation and many other cool features.
Conclusion
Crypto currency trading bots are the vital tool for traders and if you are capable of defining the effective trading strategies, your bots can be the best trading tool. Trading bots such as Cryptohopper and Trading Terminal like Growlonix are especially helpful if you are new to cryptotrading industry and need help for getting started with confidence and efficiency.
Read reviews and do your homework to ensure that you are using the right, reliable and trustworthy crypto trading bot.
