A trading bot is a script or application configured to execute buy or sell orders on the markets almost without human interference. Most bots use simple algorithms. However, there are advanced robots that use artificial intelligence (AI) with impressive market analysis capacity.
A bot is a machine that simplifies your trading operations. It relies on cutting-edge algorithms and technologies like AI and machine learning during its analyses. Operating 24 hours a day, 7 days a week, it scans and identifies profitable opportunities and immediately carries out transactions on your behalf. Do you want to opt for a crypto bot integrated into a cryptocurrency platform or for online software? In both cases, you will save time and efficiency. To maximize the impact of the trading robot, you will obviously need to understand how to use it.
There are different types of crypto trading bots, but not all are created equal. Automated crypto trading bots can be a solution if you have little time to devote to manual trading or still need to gain the technical knowledge to trade cryptocurrencies. And it’s important to note, too, that trading bots have advantages and some disadvantages. Additionally, there are many scams surrounding automated cryptocurrency trading.
Advantages of crypto trading bots
Trading robots monitor the markets 24 hours a day, seven days a week. They constantly monitor the fluctuations of cryptocurrencies in search of trading opportunities. This is impossible for a trader who is often forced to limit his trading sessions to a few hours during the day.
A trading bot never stops; it can run 24/7 without showing signs of letting up. By using this type of bot, you will be able to concentrate on something else and not have to continually follow the evolution of the market or study the charts. Tireless and on the lookout for trading opportunities, the crypto bot lets you spend your time as you wish. Better yet, it allows you to generate profits without much effort. To do this, simply configure it and launch it, the algorithm will take care of analyzing and carrying out transactions on your behalf the second it spots an opportunity.
Fast and efficient execution of tasks
Finally, know that the best trading bots are known for being responsive. Their automatic execution capacity allows them to accomplish the task quickly and efficiently. They analyze the market and place orders within the next second when the configurations are profitable while accommodating the loss limit and profit. If we know that a human trader can only make one transaction at a time, the bot can make several. In addition to saving time, you gain efficiency and performance.
Effective trading strategy
A trading bot allows you to develop an effective trading strategy. Implementing the famous Dollar Cost Averaging (DCA) strategy becomes child’s play. You don’t have to worry about following the market, keeping an eye on movements and worrying about missed opportunities. Everything is automated, and you have nothing to do except wait to cash out your winnings. On the other hand, you are protected from the risks inherent in asset volatility and can more easily generate profits. When it comes to execution, robots are faster at placing orders. These are placed as soon as a signal occurs with the possibility of setting stop loss and taking profit levels simultaneously.
Neutral, emotionless transactions
Most traders must juggle various emotions when making a trade. There is already the initial excitement, then panic then comes fear or great euphoria. In any case, trading requires nerves of steel, and this is where the bot poses as a major ally. Unlike humans, the bot does not let himself be guided by his emotions, which are obstacles to success. Once the parameters are set, it activates and stops when its objectives are achieved.
On a psychological level, the trader or investor is subject to emotions linked to capital loss or gain. This is particularly true when volatility in the cryptocurrency market increases significantly.
Another critical point is that a trading robot follows the pre-established trading plan. Thus, unlike a trader who may hesitate or question a trading signal subjectively, he does not present the slightest emotional bias.
Limits of a Trading Bot
Remember that a trading robot simply utilizes a pre-programmed strategy. So logically, if the plan is not profitable, the trading robot that applies it will not be profitable.
However, suppose that your robot applies a good strategy; you will then be able to generate profit. However, the robot will still be infallible in some market conditions; hence it is not uncommon for manual adjustments to be necessary when volatility increases or decreases significantly. You may be called upon to stop the trading robot’s operation while waiting for optimal market conditions to manifest themselves again. Knowing when to pause a cryptocurrency trading robot can be challenging, especially since monitoring it 24 hours a day is impossible.
The risks of scam
In just a few years, the bot market has literally exploded. They have, in fact, multiplied exponentially in recent years, so much so that the choice has become difficult for a beginner. In the basket, we find high-performance bots whose effectiveness has already been proven but also scams.
Also, to avoid unpleasant surprises upon arrival, only trust bots with well-established reputations. The tools offered by brokers and exchanges are considered safe bets.
A bot configuration error
This seems trivial, but know that you will never achieve your goals if you don’t set up the machine correctly. Your crypto bot parameters actually need their settings adjusted so that it can start working. You will also have to develop an investment strategy upstream of the configuration.
If lines of code scare you, know that most crypto trading bots today don’t require them. You will usually just need to check a few boxes and set the profit and loss limit, and that’s it.
The need to continually change strategy
Most traders are never 100% satisfied with the strategy they have in place. Over-the-top adjustments are certainly not inadvisable, but just make sure that this does not hinder the fulfilment of your orders.
Remember that no perfect strategy exists, and any investment is potentially risky. However, you can imitate the strategies of other traders who have already borne fruit. At least this will save you from unpleasant surprises. Likewise, don’t rely on claimed success rates, especially exaggerated ones.
Trading robot scams
If you’ve been following the cryptocurrency market for a while, you’ve probably noticed the rise of automated trading and trading robots. However, some of them are they developed by scammers who want to rip off investors.
Cryptocurrency trading bots are often presented with aggressive marketing. A “guru” may present himself as a trader who made his fortune on Wall Street or trading cryptocurrencies.
He offers to purchase his “powerful” system, which will help you make huge profits quickly. Indeed, cryptocurrencies are volatile and can make you win big soon, but most trading bots make you lose twice: not only are they expensive to use, but you lose your trading capital afterwards.
Therefore, It is essential to research the trading robot in question. But be careful; most robot review sites are affiliated with their providers and will likely only give positive reviews. The best way to know if a robot is reliable is to test it on a demo account for a while or with small amounts. But be careful; some scams are very elaborate and might perform well with small amounts and blow your account when you deposit large amounts. Which is why it is better to approach players with an established market reputation. In any case, research your opinion and only invest money you are willing to lose.
Types of crypto trading bots
These are divided into five distinct categories.
Spot Grid
The Spot Grid bot aims to capitalise on asset price changes, employing a buy-low, sell-high strategy with orders set at specific price intervals.
Several platforms allow all users to create their bots or copy those of other users.
Grid Futures
The Futures Grid bot works like the Spot Grid bot but allows you to use leverage and place “long” and “short” orders.
Rebalancing Bot
The Rebalancing Bot automatically adjusts your portfolio position based on a cryptocurrency pair you select. A strategy with this bot can maintain the same ratio of asset values through rebalancing at predefined time intervals or percentage thresholds.
DCA spot
The Spot DCA bot allows investors to buy cryptocurrencies regularly and regularly based on prices they define. Concretely, it is a bot optimised to practice the Dollar Cost Averaging method to smooth its purchases and sales. This method has proven itself in the past for long-term investments.
Auto-Invest
The Auto-Invest bot works like the Spot DCA bot, except it only relies on a time parameter for placing orders and not on prices.
One of the most popular ways to offset risk is through trading bots, but to be more precise, profitable and reliable trading bots. There is much to learn about leveraging crypto bot strategies to trade Bitcoin and other cryptocurrencies. In this post we will look at the best crypto bots for trading Bitcoin, Ethereum, etc., that can help you mitigate risks more effectively than trying to do it yourself.
1. Immediate Edge
Immediate Edge stands out because it offers diverse automated trading features with AI trading capabilities. Immediate Edge is a great choice for making passive income due to its advanced trading configurations and risk management strategy.
2. Bitsgap
Without a doubt, one of the most widely used automatic cryptocurrency trading systems in the market is Bitsgap.This cloud-based platform provides numerous preset trading strategy options, simple navigation, and an intuitive user interface. OKEX, Binance, Coinbase, Kraken, Huobi, and about twenty-five additional cryptocurrency exchanges are supported.
Supported Bot Types: Scalping, Arbitrage, Smart Orders, Futures Bots, Grid Trading Bot, Trailing Up & Down.
For crypto automated trades, you must first deposit fiat money on one exchange or crypto assets. You can trade using thousands of pairs like ETH/USD or BTC/USD. You should know that on Bitsgap, your trading operations are calculated based on your account balance. Your cryptocurrency exchanges will set your fees and are included in the profit. You can execute an arbitrage trade with just one click, a slight advantage of the AI-driven system.
All trades are non-custodial, so the funds belong to you and are stored securely in the exchange, accessible via unique API keys. The Bitsgap pricing structure is affordable and suitable for almost all trader skills.
3. Quadence
Quadence should be one of your first choices if you’re searching for one of the top cryptocurrency trading bots. This bot promises to have everything you need in one place to invest in cryptocurrencies, regardless of your degree of trading knowledge, and it can help you have a simpler experience with investing in digital assets.
With Quadence, investing your coins with just a few mouse clicks will be straightforward, or you can even connect to their advanced tools, like automatic trades and bots. You may create a free account and analyse over 1500 cryptocurrency assets on Quadence to expand your financial portfolio beyond Bitcoin and Ethereum. Knowing how crucial it is to the overall integrity of their website, they are always adding new features and enhancing what they have to offer. They also give their customers unrestricted access to portfolio data to make educated trades.
Price: Free
4. Cryptohopper
Cryptohopper is a Dutch-registered trading platform known to be one of the most efficient and transparent in the industry. Thanks to its user-friendly interface, you can access trading indicators used by the most experienced traders.
Regarding the crypto trading strategy, Cryptohopper seems to be taking this strategy to the next level. You can use this trading bot to profit from multiple trading pairs on the same exchange. This is a complex triangular cryptocurrency trading strategy. This platform also allows you to use exchange arbitrage, where the bot searches for opportunities on multiple exchanges without sending an asset from one exchange to another.
One of the most attractive solutions for novice crypto traders is that they can join the market to learn from professionals who share their successful trading patterns so that others can also prosper. The only downside that might stop a person from using this bot is the price. However, you get what you pay for.
5. HaasBot
The HaasBot bot platform was created in 2014, so it has been around for a while now and is an automated trading service that allows traders to place trades on multiple digital coins.
Since the focus is on automated crypto trading, you can use this platform to set your buy and sell limits and other elements of your crypto trading strategy. HaasBot’s inter-exchange bot allows you to exploit exchange price differences. You will also find that you can access the inter-market price gap ticker, which allows you to monitor price movements across multiple exchanges.
6. 3 commas
3Commas can help you increase your cryptocurrency investments. They have a feature-packed terminal that provides automated bots proven to work.
You can operate their bots on over 18 major cryptocurrency exchanges and get to know them in-depth with a free trial. They are going to help you capitalise on well-informed investments no matter how the market moves, and with all their features, we are confident that you will be able to carry out your cryptocurrency transactions without any problems.
7. Botsfolio
Botsfolio is another cryptocurrency trading bot that is not free, but the price starts at $5 per month, which is attractive. Another beautiful thing about Botsfolio is that you don’t need any prior coding experience or knowledge to use most of its features.
Their auto-trading features are straightforward to use and configure; you only have to choose the trading strategy you want from a long list of options. Their strategies include value investing, scalping, and even futures trading, meaning you can diversify your cryptocurrency portfolio.
They also have a customer support team and a community page via Telegram where you can get helpful information about the cryptocurrency market. As mentioned earlier, their cheapest plan is $5.
8. Gunbot
Gunbot is a premium bot that allows you to trade cryptocurrency currencies on several exchanges. They are very user-friendly, providing access to advanced trading features to people who may need to be more experienced in the general market.
They also offer individual strategies you can get the most out of and customise according to your trading preferences. All you need to do is choose your trading pairs, and then you can let the algorithm implement the trade on your behalf. You can choose an algorithm from a list of models or test your own.
9. HummingBot
HummingBot is an open source tool that can help you create and run high-frequency bots that will make a real difference to your market trading. It is accessible to everyone and can help you with different cryptocurrency exchanges.
Unlike other cryptocurrency trading bots, these guys deal with more than just simple automated trading strategies, so if you’re hoping to dip your toes in the water of several cryptocurrency investment strategies, HummingBot will be a good choice. They can also help you trade small amounts, so if you still need to be ready to delve into the cryptocurrency market, this will probably be a good choice.
How to choose an automated trading bot?
To succeed in your trading strategy, choose your best ally. What is the best way to select a reliable crypto trading bot for cryptocurrencies? Most cryptocurrency trading bots provide competing features, costs, and strategies. This makes selecting one that satisfies your demands quite challenging. This little checklist will assist you in selecting a cryptocurrency trading robot.
Security of your funds/assets
The first thing concerns the level of reliability of the automated trading bot. First, it must be compatible with the broker you have chosen. Next, check that the API is secure and has features that prove it or review that proves it. A trustworthy trading bot will provide private API keys for every exchange you integrate. However, before disclosing your API keys, it’s a good idea to disable withdrawal access as a precaution.
Bot-Supported Exchanges
It stands to reason that when a bot supports multiple exchanges, you will benefit from higher opportunities on significant cryptocurrency exchanges. For example, bitsgap supports over 25 exchanges, and Quadence supports around 13 exchanges. Bitsgap supports some of the biggest names in exchanges, including Coinbase, Binance, Bitmex, and Kraken. Therefore, much of your decision will depend on whether a bot supports your exchange.
The Community
Does the bot you are thinking about have a sizable and active community? An active community can be a great resource for resolving issues and concerns throughout your crypto trading career. The trading robot community frequently uses social media sites like Facebook, Twitter, and Telegram as a forum for discussion.
Ease of use and demo account
Also, ensure that the online software or platform has a demo account. This will allow you to familiarize yourself with the tool and test its various features. Ideally, choose an online crypto trading bot that is easy to use and offers training sections and learning videos that will make it easier to get started.
Monthly subscription and other fees
The best crypto bots generally charge a fee, but you may also find some that offer a free trial period. The subscription is generally monthly and allows you to access a range of innovative features, while the features are generally limited with free access bots.
Spotting Crypto Trading Bot Scams
Finally, remember that even the best trading bots don’t work miracles. The chances of winning may be high , but so are the risks of losing. Also, when choosing a bot, do not let yourself be lured by alleged high success rates, some approaching 100%. Also make sure that it is well-regulated and is not on any blacklist. To avoid scams, also remember to find out about withdrawing funds, their security and the existence of customer service available at all hours.
FAQ
Why a crypto trading bot?
There are many ways to invest in cryptocurrencies and trade successfully online. The good news is that it’s not a one-size-fits-all system, so you can research and find the investment strategy that best suits your needs. We think one of the most popular cryptocurrency investment strategies right now is using a profitable crypto trading bot, and there are even some AI bots now in the market, because you can frequently make small profits which will accumulate over time.
Why use a crypto arbitrage robot?
One of the downsides of crypto trading is that you always need to be near a computer if you want to make the most of small price fluctuations in the market. If you miss these small changes, you miss good opportunities to make money from your cryptocurrency investments.
This is where an automated crypto trading bot comes in. Not only can they help you find the right strategy for your crypto portfolio, but they can also help you determine the best times to make these trades, and they can do it automatically, so you don’t necessarily have to do it or be near your computer at all times.
Is it illegal to use a crypto trading bot?
The problem with the world of cryptocurrency is that, in many ways, it needs to be more regulated, and when it comes to different countries, each country has different rules and regulations. Using a cryptocurrency bot to implement your trades is not technically illegal, mainly if it saves you time.
However, we recommend a high-quality crypto trading bot because you will only get burned if something goes wrong.
What are the best crypto coins to trade?
Of course, if you don’t pair the right coin with the right trading strategy, you could lose a successful trade without even knowing it. We believe Bitcoin is the safest coin if you want to implement a trading strategy, and Ethereum is also good.
The problem with trading strategies is that you need to be able to use a coin that is proven in the market rather than choosing a coin that has yet to be proven.
