Blockchain

What are Crypto Trading Bots? All You Need to Know

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The fact that there are so many variables in cryptocurrency trading makes it challenging. Due to its inherent flaws, even the most seasoned traders frequently fail to make consistently lucrative transactions. As a result, trading bots were invented to automate trades, leading to the development of automated crypto trading. This is advantageous because trading is less likely to fail because human flaws like emotions are eliminated.

What exactly are cryptocurrency trading bots, how do they function, and who can use them in transactions to improve their chances of winning? Let’s read about it.

What do you know about Crypto Trading Bots?

A bot is an automated computer that works online and completes routine activities faster than people. According to some estimates, bots interacting with users and online pages, searching for content, and carrying out other tasks make up more than half of all internet traffic.

The same fundamental concept governs how cryptocurrency trading bots work. They are computer programs that use artificial intelligence to perform tasks based on predefined criteria. No more passing up transactions or chances. Using crypto trading bots, you may quickly, efficiently, and automatically purchase, sell, or hold assets day or night from anywhere in the globe, whether you want to invest in the most undervalued cryptocurrencies or add additional crypto coins to your account.

Be aware of Fake Crypto Bots

First and foremost, it’s important to realize that not all crypto trading bots are made equal. Most cryptocurrency trading bots developed by anonymous bot developers that want to sell their generic bots to as many users as possible are available on trading platforms. Users are frequently seduced by claims of high returns even if there is little evidence to support these assertions. In actuality, a lot of crypto trading bots are merely frauds. Because you won’t know anything about the bot or its author, you’ll frequently have no idea how to, let alone if, it functions. How bots don’t work for you is as follows.

How Do Cryptocurrency Bots Function?

Hosting for cryptocurrency trading bots is provided by websites like Coinrule, Cryptohopper, etc. You can change the rules these sites use to construct crypto trading bots to work for your particular goal.

Perhaps their ability to trade continuously, something no human can accomplish, makes them so impressive. Depending on how the market behaves, you can configure them to execute trades at specific periods during the day or night.

Some bots stand out from the crowd thanks to unique features, like the HODL feature on 3 Commas. In addition to trading, this aids you in automatically purchasing and holding bitcoins at a discount. It is up to you to determine which cryptocurrencies you want and which bot will assist you in obtaining them.

Services that Crypto trading bots offer

Buy/sell cryptocurrency possessions

Application Program Interface (API) keys are used by crypto trading bots to acquire and sell bitcoin assets systematically. Your trading bot will require the API key, which serves as a password, to access your account and place bitcoin orders. This is helpful if you want to avoid buying tokens in bulk.

Risk prediction

A crucial component of a bitcoin trading bot is risk prediction. Bots use market data to calculate an asset’s potential risk. The bot uses this data to determine how much to trade or invest.

Data analysis

Bots analyze raw market data from several sources, decide whether to purchase or sell, and proceed. Many bots allow users to alter the data types to produce more accurate responses.

Types of Cryptocurrency Bots

The mechanism of a cryptocurrency trading bot can be set based on your plans for long- or short-term investments. Here are some of the most common types of cryptocurrency bots now in use.

Trend Trading Bot

Trend trading takes an asset’s momentum into account before executing a buy or sell order on it. The bot will open a long position if the trend indicates a price rise. Similarly, a short position will be initiated when the price declines.

Arbitrage Bot

Cryptocurrency arbitrage trading bots, one of the most common forms, compare prices on various exchanges. It then executes trades to profit from the price differences. Arbitrage bots assist in automatically setting Buy and Sell orders when there is a chance to benefit, given the extreme volatility of the cryptocurrency market. Despite this, profits from arbitrage bots can be insufficient.

Coin Lending Bots

With these bots, you can loan bitcoin to margin traders in exchange for interest. Bots for coin lending make the process more automated. It will enable you to obtain better rates and save you time spent looking for the best interest rate.

However, it’s crucial to remember that cryptocurrency trading bots are merely instruments for trade automation. However, not everyone may be intended for them. Before choosing bots, do research carefully because failing to do so could result in losses.

Bots carry risks and programming faults can also hamper the effectiveness of these robots. Remember that the rules and commands you give to the bots determine how they behave. Therefore, you must have a thorough understanding of cryptocurrencies and a sound investment strategy for a crypto trading bot to work in your favor,

Recommended Crypto Trading Bots

Crypto trading bots are automatic programs that assist you in timing your purchases and sales of cryptocurrency. This software’s major objectives are to boost profits while lowering risks and losses. You can manage all of your cryptocurrency exchange accounts with these applications. Many apps make it simple to trade for cryptocurrencies like Ethereum, Litecoin, Bitcoin (BTC), and more.

The list of the Top Crypto Trading Bots/Robots with their most popular features is provided below.

Cryptohopper

One of the greatest automated trading bots, Cryptohopper allows you to manage all your cryptocurrency exchange accounts in one location. You can trade for currencies, including Litecoin, Ethereum, and BTC.

Types of BotsPriceMobile AppsExchange
Arbitrage, AI, Market-Maker, and Mirror Trading.$0 Trading Free and fixed Monthly PricingiOS & AndroidKraken, Binance, Bittrex, Okex, KuCoin, Coinbase Pro, HitBTC, etc.

Features

  • With the help of this bitcoin trading robot, you may construct your technical analysis.
  • It’s simple to get techniques and templates for bots.
  • It has an intuitive user interface.
  • The tool offers performance reports in real time.
  • Your account is secured by Cryptohopper using safe techniques.
  • You can trade bitcoins for free while maintaining your privacy.
  • Algorithms support EMA, RSI, BB, and other popular signals and indicators.
Benefits                     Drawbacks
With no need to enter credit card information to join, it offers a simple setup process.24/7 trading bot that exclusively uses cloud storage to host its services.Allows you to paper trade without danger to your finances so that you may test your technique.Data from robust backtestingLimited technical support is possible.

Pionex

One of the first exchanges in the world to offer 12 free trading bots is Pionex. Users can trade automatically around the clock without constantly monitoring the marketplace. It is one of the largest Binance brokers and combines the liquidity from Huobi Global.

Types of BotsPriceMobile AppsExchange
Grid Trading Bot, Rebalancing Bot, Spot-Futures Arbitrage Bot.Free TrialiOS & AndroidBinance, Pionex Huobi Global

Features

  • Retail investors can use 16 free trading bots from Pionex.
  • The trading charge is the lowest compared to the majority of the main exchanges. The maker and taker each pay a trading commission of 0.05%.
  • Users of the Grid Trading Bot can purchase low and sell high within a certain price range.
  • Up to 5x leverage is offered by the leveraged grid bot.
  • Thanks to the Spot-Futures Arbitrage bot, retail investors can generate passive income with little risk. This strategy’s anticipated return is 15% to 50% APR.
  • Trades can have multiple stop-loss, take-profit, and trailing orders using the Smart Trade terminal.
  • MSB (Money Services Business) Licence issued by U.S. FinCEN authorized
Benefits                     Drawbacks
Enables customers to trade at a particular price range between low and high prices.Thanks to the Spot-Futures Arbitrage bot, retail investors can generate passive income with little risk.You can trade with USD and make deposits or withdrawals from your bank account.Custom trading strategies aren’t supported.

3Commas

One of the greatest trading bots that helps you raise profits while lowering risks and losses is 3Commas. With the help of this program, you can profit with little effort while also developing a strategy based on more than 20 trading indications.

Types of BotsPriceMobile AppsExchange
Grid Bot, Options Bots, DCA Bots, Smart Trade, TradingView, etc.$14.50iOS & AndroidBinance DEX, Coinbase Pro, Binance, Gate.io, Cex.io, etc.

Features

  • provide single and multiple-pair bots.
  • Using this platform, you can trade whenever you want.
  • The settings of other bots can be copied.
  • Maintaining coin ratios enables you to balance your portfolio.
  • Deal notifications are made available by these bitcoin margin trading platforms via emails, browsers, and mobile apps.
  • Assist you in making money in sideways, bullish, and bearish markets
  • Backtesting, dollar-cost averaging, custom TradingView signals, etc., are supported.
  • Allows Paper Exchange
Benefits                     Drawbacks
Options can be traded on an exchange.Buy and sell automation in advance in a single window.Trade using technical indicators whenever you want.Reputable with outstanding Trustpilot reviewsIt can be a bit challenging for beginners

Who Is Eligible for Crypto Trading Bots?

As already established, using crypto trading bots doesn’t require advanced programming knowledge. As a result, anyone who is completely new to trading can use them.

Of course, experienced traders risk allowing their feelings or other problems to prevent them from making deals. They occasionally use trading bots as assistance, for instance, when they must carry out a trade at night.

Trading bots can be useful during these times or when they are preoccupied with other commitments because they cannot trade continuously.

In conclusion, everyone employs crypto trading bots, if not because they are inexperienced and inexperienced because they cannot execute the trade at the best time.

Use of trading bots for cryptocurrency trading: Benefits and Drawbacks

Benefits

Investigate and Fine-tune: Trading bots offer a wealth of data about the effectiveness of your strategy. This data can be analyzed to help you adjust your plan.

Automation: You may automate your trading technique with crypto trading bots. Thus, if your method is sound, bots will assist you in making money constantly.

Implementation: Compared to humans, a trading robot can quickly complete trades. By doing so, you have an advantage over others by eliminating latency and emotions.

Drawbacks

Monitoring: The crypto market is very unpredictable. As a result, you should always keep an eye on your bots. It could occasionally cause you to have restless nights.

Beginners should stay away: Beginners should stay away from custom coding trading tactics, except for Grid trading and copy trading..

The Final Verdict

Although crypto trading bots are worthy, the price of cryptocurrencies are notoriously erratic, changing dramatically even within a minute. Investors can participate in cryptocurrency trading at any time of day, wherever in the world. The combined impact of these factors greatly reduces the efficiency of human cryptocurrency trading.

A crypto trading bot is always thought to be more effective while buying and selling cryptocurrencies. Delays and, more crucially, human mistakes are not a concern. The bot can trade assets with a higher possibility of making money if it has access to accurate data and develops appropriate algorithms. These bots’ ability to operate around the clock is an extra benefit.

Conclusion

A bot enables you to automate a unique or outside trading technique. It employs automated and clever technology like machine learning and artificial intelligence. These bots come in various forms, including Trend Trading, arbitrage, and coin lending bots, categorised according to trading techniques.

In particular, cryptocurrency trading bots might assist you in your deals if you are a beginner. A crypto trading bot isn’t a guarantee that you’ll make money, so take the time to learn how each one operates on your chosen platform.

If you’re not sure whether trading cryptocurrencies is for you, you might want to spend some time studying the market by keeping an eye on how prices fluctuate. You’ll probably be able to use the bot more effectively if you have a deeper understanding of the market. So a trading bot gives you great advice while letting you dabble in the market.

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Muhammad Tufail Sheikh
Tufail Sheikh leads Techywired's coverage of computing and gaming niche. He has been writing about best gaming laptops and PCs which is his passion right from the start of his career. He is a gaming geek from the early childhood and you can always find him playing video games in his favorite couch.

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