Crypto Trading Bot Benefits

12/29/2021
Crypto Trading Bot Benefits

A cryptocurrency robot (bot) also known as Crypto Trading Bot is a specially created algorithm that uses different indicators, as well as a software system that recognizes buy-sell opportunities in the crypto currency markets and makes transactions on behalf of the user (called bot trading).

Across a rapidly developing crypto market, automated crypto trading is in great demand. Traders with coding skills and programming knowledge can create their own crypto bots or intelligently optimize existing crypto bots for effective trading with digital coins. These crypto bots can independently trade cryptographic assets, earning for its owner.

However, there is also a significant risk involved! Tens and hundreds of algorithms for automated crypto trading across crypto exchange assets exist on the Internet, and nothing concrete is known about their quality or reliability. So, it’s not uncommon for a beginner, especially to make a mistake in settings or lose funds due to a poorly written crypto trading bot, so much so that crypto bots figure in the top online scam schemes.

What different types of Crypto Bots do?

Indicator Based Crypto Bots: These use indicators of technical analysis SMA, RSI, MACD, etc. to make decisions about buying or selling an asset.

Customizable Crypto Bots: (Only for advanced users) There is no preset strategy, the crypto trading bot can be completely customized from scratch to suit your requirements.

Scriptable Crypto Bots: (Only for those familiar with programming) These are crypto bots built using open source code and technologies. This allows to achieve the most tailored automated crypto trading experience due to the flexibility of development.

Market Makers Crypto Bots: These crypto bots add orders to both sides of the order book, thereby forming market liquidity. If during this process live traders appear, then their orders are instantly redeemed, post which the bot continues to work.

Signal Based Crypto Bots: These bots collect forecasts from TradingView, social media, blogs, media, Telegram channels and other sources. Based on the received data, they send signals about changes in the market or create trading recommendations for effective bot trading.

Arbitration Crypto Bots: This type of bot trading is focused on intra-exchange or inter-exchange arbitration. Due to the high volatility of the crypto markets, such bots carry out a large number of transactions and provide a certain amount of income. However, finding an effective arbitration bot is difficult – as the more people use it, the lower the profitability will be.

Statistical Arbitrage Crypto Bots: The type of automated bot trading relies on rate differences of different coins and finds the dependence of some on others. The set of cryptocurrencies under consideration is selected by the user, along-with the candidates for short and long at their discretion. Such crypto bots are usually not available to the general public and are used by hedge funds.

There is albeit no perfect crypto trading bot that will do everything for you. In each case in-depth understanding of its actions and algorithms is required, along with the ability to properly configure it. It is advisable to train on demo accounts first!

Features of Crypto Bots!

  • Trading strategies. A crypto trading bot allows implementation, including customizable parameters, support for specific technical indicators and market information.
  • Ease of customization balanced with freedom of action for the user.
  • Ease of use. Some crypto bots can be launched in a few clicks by choosing the desired strategy, others need to be programmed. The choice depends on your knowledge and skills.
  • Supported Crypto Exchanges. As a rule, all well-known crypto bots are compatible with all well-known exchanges. For e.g cryptohopper is a popular binance trading bot as well as a coinbase trading bot. But in case you use lesser-known platforms for trading, then pay special attention to this detail.
  • Fees and other Charges. Some crypto bots are available only for a subscription fee, while others are free, but they charge a commission on each trade.

Benefits of Crypto Bots

Round-the-clock trade.

A crypto trading bot does not need to sleep, eat or rest, unlike a human. A trader does not need to constantly monitor the state of the virtual currency market and constantly calculate the moments for opening positions.

Lack of emotion and strict adherence to the plan.

People make mistakes in trading operations. Using crypto bots to trade digital assets eliminates the factor of fear and the element of emotional state in trading decisions. Most novice crypto traders lose deposits solely due to psycho-emotional instability and due to disregard of the rules of their own trading strategy.

Instant automatic execution of operations according to the specified parameters.

A crypto trading bot is able to clearly recognize chart patterns, candlestick patterns, directions of movement of quotes and trend reversal points, which are often invisible to a trader

Convenient diversification and risk sharing.

A crypto trading bot is able to clearly recognize chart patterns, candlestick patterns, directions of movement of quotes and trend reversal points, which are often invisible to a trader. A well-tuned automated crypto trading bot analyzes charts more efficiently, concludes more efficient deals and searches for the most optimal entry points.

Conclusion

Manual trading on any crypto exchange requires traders to have excellent theoretical and practical training and a lot of time. It is necessary to have specific trading skills, knowledge of assets. These difficulties for beginners can be easily mitigated by using trading crypto bots. But it is important to make competent testing of a purchased or free algorithm for automated crypto trading.

It should be remembered that the quality of any crypto trading bot is determined by the correlation between its efficiency and real value. Any crypto trading bot for trading cryptocurrencies on the exchange must have a stable performance.

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