Cryptocurrency Trading BotsCrypto Trading PlatformsCryptobots
Automated trading platforms powered by configurable crypto trading bots are on the rise. What are the pros and cons of these platforms, who are the market leaders – and should you use one?
In global financial markets, approximately 75% of trading is algorithmic, and the crypto markets are no different. The last two years have seen a rise in the number of automated crypto bot trading platforms empowering crypto traders to create nuanced, 24/7 trading strategies that can be adjusted and refined as needed.
Crypto bots are software applications that use an API to interact with a user’s exchange account and automatically execute trades when market conditions meet a set of predefined criteria. The best crypto trading bots can interpret and combine traditional market signals such as volume, orders, price, and time, with technical analysis signals such as moving averages, Bollinger Bands, the Ichimoku Cloud and increasingly, with other factors such as social media sentiment.
There are a variety of crypto bot trading platforms catering to the different needs of the trading community. Some are designed for experienced traders and enable them to create complex automated strategies that can be backtested against historical crypto market data.
Others are targeted at less experienced crypto investors who want to improve the return from their crypto assets without the stress of making trading decisions themselves. These platforms offer copy trading, social trading, and automated crypto trading based on algorithmic strategies.
With the growing interest in DeFi and the yield farming phenomenon, crypto holders can put their assets to work to generate a return. Whether you’re a passive investor or an active trader, there are many choices available, all with their own risk profile. This article will look at some of the most popular crypto trading bot platforms available today.
Coinrule is a cloud-based crypto trading platform empowering traders to compete with professional algorithmic traders and hedge funds. It was founded in London by Gabriele Musella and Oleg Giberstein who discovered that trading crypto currencies was unnecessarily complicated.
Thanks to its ease of use and If-This-Then-That logic,users can set custom automated trades and never miss a rally or get caught in a dip. No coding is required and Coinrule’s customisation and flexibility mean the bot does not operate as a black box and users are in full control of their trading.
Watch: Coinrule Intro
Coinrule has hundreds of template strategies available and you’ve got unlimited options when creating new ones. You can test them on the demo exchange, and once you’re ready to connect your real exchange, no withdrawal rights are required. That means that your funds are safe and cannot be accessed maliciously through Coinrule. Regardless, Coinrule uses military-grade encryption for all API keys and has two-factor authentication available for increased peace of mind.
Those powerful capabilities, features and security mean that traders and investment groups have taken to using Coinrule as their go-to algorithmic trading platform. In addition, these more demanding traders will find features tailored to their needs such as dedicated ultra-low latency servers, advanced technical indicators and leverage trading.
Watch: Coinrule Walkthrough
Finally, Coinrule has a friendly and active trading community as well as an extensive tutorial section with educational videos. Also, one-on-one trading sessions are available to help users make the most of the trading platform.
Coinrule offers a free account and three paid tiers. The free account includes up to $3K/month trading volume, and contains 2 Live and Demo rules and 7 template strategies – perfect for beginners and those who want to test the platform.
The Hobbyist ($29.99/mo) and Trader ($59.99/mo) tiers will push the monthly trading volume limits to up to $1M, and include increased live rules as well as a myriad of template strategies and features like advanced indicators and operators.
The Pro ($449.99/mo) tier will push the monthly trading volume limits up to $5M and offer demanding features for professional traders and investment groups like dedicated servers with ultra-fast execution. Volume extensions are available for Pro plan traders if required.
Binance, BinanceUS, Binance Futures, Coinbase Pro, OKEX, Bitstamp, Poloniex, Kraken, BitPanda Pro, HitBTC and Liquid. Bitmex and FTX are coming soon.
Pionex is a cryptocurrency exchange with built-in trading bots. You can access 16 unique trading bots for no additional fee. These bots allow you to automate your investing strategy so you don’t need to constantly monitor the market. The platform is U.S. FinCEN’s MSB (Money Services Business) License approved.
Pionex is one of the biggest Binance brokers and aggregates the liquidity from Huobi Global simultaneously, which makes Pionex the best platform for crypto trading bot traders.
Though Pionex supports manual trading using crypto-to-crypto conversions, its primary product is its trading bot selection. A cryptocurrency trading bot is an automated program that executes buy and sell orders with no manual input when specific, pre-defined market conditions are met.
Pionex provides 16 free crypto trading bots for retail investors. It’s trading fee is the lowest compared to most of the major exchanges with a 0.05% fee for both maker and taker. No subscription fee is needed for the trading bot. The Grid Trading Bot allows users to buy low and sell high in a specific price range, while the Leveraged Grid Bot provides up to 5x leverage.
The Spot-Futures Arbitrage bot helps retail investors to make passive income with low risk. The estimated return for this strategy is 15~50% APR. Pionex’s Smart Trade terminal allows traders to set up stop-loss, take profit, trailing in one trade.
All 16 bots are free for users on the Pionex Exchange
Mudrex is a YCombinator-backed crypto investment platform (the only one on this list) that offers a variety of investment solutions that generate consistent returns. Launched in 2018, Mudrex has amassed over 100,000 investors from over 100 countries, with over $3 billion in trading volume and $20 million assets under management. With Mudrex, users can invest in crypto trading bots created by expert crypto traders from around the world.
These trading bots or algorithms are published after a stringent review process by the Mudrex team and are spread across cryptocurrency trading pairs, exchanges, and trading strategies to ensure smooth sailing across market conditions. Each algo bundle is a portfolio of multiple strategies and technical indicators created to work together.
For investors, the Mudrex Marketplace offers a wide range of crypto trading bots to choose from, and users can filter these bots on the basis of metrics such as total returns, 30-day returns, trading pair, number of investors, etc. Mudrex also offers a novel feature called Mudrex Protect, where users get a 100% fee refund if their strategy fails to yield profits in the month.
Mudrex Coin Sets
One unique and game-changing feature of the Mudrex platform is the ability of users to invest in thematic crypto baskets called Coin Sets. These are professionally-curated crypto baskets created, managed and rebalanced by experts, built on different themes. Instead of investing in a single token, users can invest in token bundles created around a specific theme.
For example, some of the top Coin Sets include Crypto Blue Chip (top crypto tokens by market cap), Metaverse (top metaverse platforms), and VC 6 (tokens that global Venture Capitalists believe in). Start with a minimum amount of $10, and invest using the top exchanges, including Binance, OKEx, Coinbase Pro, Bitmex, Bybit, Deribit and FTX.
Mudrex is offering a guaranteed reward for every user investing in Coin Sets of up to $100 in free crypto, upon an investment of $100 or more.
Watch: Introduction to Mudrex
For users signing up through Brave New Coin, Mudrex is currently offering a free, no-fee plan for Coin Sets. Sign up here.
For algos, Mudrex has a clear 0-2% fee that can vary depending on the algo chosen. Find more details here.
For users signing up via Brave New Coin (link here), Mudrex is offering free crypto up to $100 for investments worth $100 or more. This is for a limited time, however, it is applicable for now.
Users can start investing with Mudrex in just a few clicks by connecting their accounts with the top exchanges through APIs (including Binance, OKEx, Coinbase Pro, Bitmex, Bybit, Deribit and FTX) or by depositing funds directly into the all-secure Binance-powered Mudrex wallet for a smooth trading experience.
Launched in 2020, Stoic is a newer cryptocurrency trading bot with AI, which was developed by the Cindicator team.
Cindicator is one of the older crypto companies and its original flagship product is a ‘Hybrid Intelligence’ platform. That platform merges forecasts from 180,000+ analysts and AI to create predictive indicators for crypto prices. Some of those indicators are even available on Bloomberg Terminals, which are used by hedge funds and institutional investors.
Before Stoic, Cindicator was using those indicators to run a quant crypto hedge fund. Now Stoic uses the top-notch trading infrastructure and quantitative research that was originally developed for Cindicator’s hedge fund.
While under the hood Stoic is complex, it is very user friendly, even for complete beginners.
Watch: Intro to Stoic
Stoic works right out of the box and doesn’t require any tinkering with complicated settings to get started. The whole setup takes just a few taps: install the app, create an API key, and scan a QR code to connect the exchange account to Stoic.
Right now there is just one trading strategy: a long-only portfolio of altcoins rebalanced daily based on quant research. Long-only means that there is no shorting so it performs best during bullish periods. The portfolio includes a wide range of crypto assets with at least $10 million in daily volumes.
Stoic first came to prominence on YouTube and TikTok in early 2021, thanks to the outsize returns of its early users. The first users joined Stoic in March 2020, way before the public launch. They weren’t disappointed: in its first 12 months, Stoic returned a whopping +2,193%.
Even after the May sell-off, Stoic continued to outperform. In the first half of 2021, this strategy generated a return of +228%, beating Bitcoin, which returned 19%.
One of the unique features of Stoic is a built-in hedge feature. Based on market conditions, the algorithm holds a certain percentage of the portfolio in USDT stablecoin as a hedge. In case of market corrections, the bot uses USDT to buy assets at lower prices.
Users also have an option to change the hedge to anything from 0% (go all-in on altcoins if you think we’re in a bull run) to 100% (put everything into USDT if you think the crash is coming). Alternatively, users can just delegate that decision to the algorithm, which will adjust dynamically.
The hedge feature is also useful for withdrawing profits: just convert the percentage you want to withdraw into USDT. As with other bots, users of Stoic can withdraw funds at any time with zero notice.
All that helped Stoic to go from zero to managing over $50 million in crypto assets on thousands of users’ exchange accounts.
Stoic charges a management fee of 5% of assets on the exchange account connected to it. This is an annual fee and it is paid upfront for 12 months.
The fees are paid in USDT by transferring it as an ERC-20 token to a unique address that Stoic generates for the user.
The minimum starting exchange account balance is $1,000, so the lowest fee is $50. This covers a full year of running Stoic and is quite affordable for those who just want to try it out before making a larger commitment.
Currently, Stoic works only with Binance and Binance US.
Bitsgap is a cloud-based all-in-one crypto trading platform that allows users to manage multiple trading accounts via one unified interface. Launched in February 2018, the platform integrates with up to 30 crypto exchanges via API. This means users can monitor their complete holdings across all connected exchanges – and trade more than 10,000 crypto-currency pairs from a single dashboard – instead of having to log in to each exchange individually.
Bitsgap features many easy-to-understand trading tools including automated bots to set up a buying and selling strategies to generate profit from any price movement, an arbitrage service, and total portfolio management – monitoring holdings and order statuses; tracking open positions on connected exchanges; smart trades to place take profit and stop-loss trades simultaneously; on-chart order management to make quick changes to orders, and alerts to track market anomalies.
The number of connected exchanges is a key advantage of the Bitsgap platform, the company says, because it enables account holders to easily find arbitrage opportunities. For example, the arbitrage page provides a list of potential arbitrage possibilities in one easy-to-view format where you can see the purchase price, selling price, and the net profit you could generate after filling a transaction. Bitsgap says users can exploit these price differences as long as they have accounts connected via API to those exchanges and have trading balances available.
Most Bitsgap tools can be automated and the platform is accessible on both desktop and mobile devices. Bitsgap features a demo mode so beginners can learn how trading works without risking their funds – and more experienced users can test advanced trading strategies. From a security perspective, users can opt for 2FA and email confirmation of unknown device logins. Users define API key permissions and Bitsgap only requires access to trading history, balance view, and trading permission so user funds always stay on their exchange account.
Bitsgap offers three pricing tiers differentiated by the number of tools, bots and volume of trades. The Basic package, for example, comes with 2 bots and a monthly volume limit of $25,000. It has no arbitrage option and costs $19 a month. The Advanced plan includes arbitrage, 5 bots and a $100,000 monthly volume limit for $44 a month, and the Pro pack has all features, 15 bots and unlimited trading for $110 a month. New accounts come with a 14 day free trial (no credit card required) during which several features can be used free of charge.
Binance, Kraken, Livecoin, Poloniex, Exmo, Yobit, The rocktrading, Wex, Bitfinex, Bitstamp.com, Bittrex.com, OKEX, Huobi, HitBTC, Kucoin, CEX.10, Poloniex, Coinbene, ZB.com, CoinEx, Gemini, Gate.10, Liquid, LBANK, Bibox, Bit-Z, DDEX BIGone, Bithumb
Cryptohopper is a cloud-based crypto asset trading platform. Users can use the platform’s Strategy Designer to create strategies, follow ‘experts’ or purchase a strategy template from the marketplace. Using the Strategy Designer, users can select up to 30 technical indicators and 90 candlestick patterns to create a strategy. Cryptohopper comes with an automatic backtester that tests, rates, and deploys trading strategies.
The platform allows simulated paper-trading, so traders can validate a strategy without risking capital. Other features include AI powered Historical Backtesting, Trailing Stop-Loss, Stop-Buy and Stop-Short, Dollar Cost Averaging, the ability to trade using multiple exchanges, configuration templates to create more advanced strategies and Performance Reports to identify the best performing crypto signals and strategies. CryptoHopper has an active community, a comprehensive tutorial section and a learning academy with video courses with tips on how to best use the platform.
Cryptohopper’s pricing is a monthly membership fee model. Four packages are available. Pioneer is free, the Explorer package costs $19 per month, the Adventurer is $49, and the Hero package is $99 a month. The difference between the packages is the number of coins, positions and triggers that can be set up with each. For example, the Explorer package (which has a free 7-day trial) will allow 80 positions across a max of 15 coins and 2 triggers, while the Hero package allows 500 positions across 75 coins and 10 triggers.
Binance, Binance US, BitFinex, Bittrex, Bitvavo, Coinbase Pro, HitBTC, Huobi, Kraken, KuCoin, OKEx, Poloniex, and BitPanda Pro.
Wunderbit Trading is a cloud-based platform that allows you to start trading and investing in cryptocurrency seamlessly. Users can copy trade the best crypto traders with transparent track records, trade themselves using Wunderbit’s advanced trading terminal – or create fully automated trading bots using TradingView.
It is possible to manage portfolios of multiple crypto exchange accounts at the same time using Wunderbit – without needing to execute separate trades on each account – and use the full spectrum of trading features like simultaneous take-profit and stop-loss targets, swing trade, trailing stop, multiple entries for bots and many more.
Two unique features that distinguish Wunderbit from similar services are an easy integration with TradingView and its Spread-trading terminal. Wunderbit Trading helps users to automate any TradingView scripts into a fully functioning crypto trading bot. With easy to use automated trading software you can construct and adjust any crypto bot in a matter of seconds.
The Spread-trading terminal allows users to select which assets they would like to use for creating a spread and will execute the buy and sell orders for the chosen pairs simultaneously. Applying spread trading to crypto futures will automatically reduce the overall volatility and at the same time limits a trader’s risk in the event of an unexpected market crash.
Wunderbit Trading’s free account allows you to start with manual trading, trading bots and copy-trading. Its paid plans are competitively priced and allow users to have more open positions, active bots and a range of more advanced features. The Basic plan is $9.95 a month, Pro is $24.95 and Premium retails for $44.95. Substantial discounts are available when buying 3 months, 6 months and 12 months subscriptions.
Binance, Binance Futures, FTX.US, Bybit, Deribit, HitBTC, Bitpanda Pro, Kraken, OKEX, Kucoin and Bittrex.
Altrady is a powerful crypto trading tool created with a single goal in mind: to make crypto trading easily accessible to everyone.
Altrady’s integrated tools assist traders in researching and understanding their market, to make time-saving trading decisions, and increase their profits. The Take Profit Order, for example, helps traders optimize their gains and make maximum profit out of rapid price movements. Other options like the Trailing Stop Order allow you to mitigate risks and protect gains.
Watch: Altrady smart crypto trading automation
Smart Orders: Altrady Smart Orders allows traders to take full control over their positions, simplifying entry orders and automating exit orders.
Portfolio Manager: Easily see portfolio information per account, or for all exchanges combined. View your HODLing and trading accounts all in one place.
Trading Analytics: Altrady provides easy access to high-quality historical data and market analytics, enabling traders to have full insight before making a trade.
Multicharts: Altrady charts are fully customizable. You can view multiple markets from different cryptocurrency exchanges on the same page (up to 4 charts), focus on a single market – or work with several charts at once.
Crypto Base Scanner: Using the QFL trading strategy, the Crypto Base Scanner tool scans the market for preferable entry points likely to lead to profits – and notifies the user.
Crypto Quick Scanner: The Quick Scan feature immediately notifies traders about price movements with the potential for scalping opportunities and other possible profits. Whether the price goes up or down, Quick Scan can inform you of all the market’s important events.
Altrady can be integrated with most popular exchanges such as Binance, Coinbase Pro, Huobi, Kraken, BitMex and more. You no longer have to choose between exchanges, and you don’t have to waste time learning how to use a new platform. You can also manage multiple accounts on the same exchange and view, trade, and analyze each account separately or together.
Launched in December 2016, Gunbot is one of the oldest and most popular crypto trading bots. Gunbot’s active trading community has over 7000 members and continues to see exponential growth. The bot is suitable for both novice traders and more experienced ones. For those who are new to trading, Gunbot comes with up to 14 powerful precoded trading strategies – allowing beginners to easily pick the pairs they want to trade with and then simply let the bot do the hard work.
For more experienced traders, Gunbot offers impressive customization – with users easily able to modify its precoded strategies to suit their trading preferences – or even create their own fully customized and personalized strategies from scratch. From an ease-of-use perspective, Gunbot has an upgraded interface that allows traders to easily check their portfolio values, charting of all pairs, trading indicators, recent trades and more.
Also included with Gunbot are several powerful add ons including BitRage, which is an arbitrage bot that in addition to direct arbitrage is able to execute triangular arbitrage on one exchange. Other add ons include TradingView and Backtesting.
Gunbot offers lifetime licenses with three pricing packages – Standard, Pro and Ultimate – for 0.001375 BTC, 0.02062 BTC and 0.03437 BTC respectively. The packages are differentiated by the number of exchanges they can trade on simultaneously (one exchange with Standard and five with Ultimate, for example), and the number of built-in add-ons. Additional add-on packages can also be purchased separately. Lifetime updates are free with all packages. Gunbot offers support via Telegram, email, Whatsapp and Skype.
Gunbot is supported on over 100 exchanges, including Binance, Binance US, Bitmex, Bittrex, Bitfinex, Coinbase Pro, Kukoin, HitBTC, Cex.io, Poloniex, Kraken and Huobi. Gunbot says it continues to add new exchanges based on user requests.
CryptoHero is a multi-platform crypto trading bot. Powered by AI technology and proprietary algorithms, this service allows you to connect to a wide range of crypto trading exchanges, automating your investments and increasing profits.
CryptoHero is founded by a team of experienced fund managers who have been trading crypto and the securities market for more than twenty years.
CryptoHero bots can be configured with technical indicators. Enter a trade with one, exit with another, all without writing a line of code. CryptoHero offers presets for popular technical indicators, and allows multiple rules and triggers to work together.
Backtest bots with historical data before deploying. Get an indicative performance of your bot based on actual data with different trading frequency, against different time periods of up to a year.
Video tutorial: How to create your first crypto trading bot on CryptoHero
Basic plan: Free.
Premium plan: $13.99 a month
Binance, Huobi, OKEx, Bittrex, FTX, Kraken, Bitfinex, Coinbase Pro, Gate IO, Kucoin, IndoDax.
Trality is a platform for anybody who wants to profit from algorithmic crypto trading without giving up their day job. Founded in Vienna in 2019 by Moritz Putzhammer and Christopher Helf, the platform has quickly become a popular choice for both beginner and advanced crypto traders.
Trality’s goal is to close the gap between professional and private trading by making it possible for everyone to access the technology of automated trading bots and help traders make smarter trades, unbiased and fully automatic.
Trality offers two state-of-the-art tools for bot creation and a lightning-quick backtesting module to validate strategy performance on historical data to get a better understanding of risk.
The Trality Rule Builder is a simple yet powerful graphic interface that lets you build trading bots by dragging and dropping technical indicators based on boolean logic so it’s the same as building your own trading algorithm without actually writing a single line of code.
Video tutorial: How to create your own trading algorithm with Trality Rule Builder
The other option to create a bot is with the Code Editor, an in-browser Python editor which allows you to create a trading algorithm from scratch using code. This is a more advanced option as it requires traders to know the Python programming language.
Video tutorial: How to use the Code Editor
Trality offers 4 different packages differentiated by trading volume, number of bots, tick interval and log retention.
All Trality plans come with a 20% discount for yearly subscriptions. Check the Trality pricing page for more details.
Binance, Kraken, Bitpanda, Coinbase Pro
The 3Commas trading terminal and trading platform offer a wide range of automated trading bots with the ability to configure them for round-the-clock execution of the preferred strategy. Using the trading platform simplifies the process of trading and expands the opportunities available to traders.
3Commas provides professional tools to optimize and automate your own trades, available both on the web and through the mobile app. With its accessible and intuitive functionality, the platform is friendly towards users with no technical or financial background.
A Smart Trading Terminal presents the trading platform with trading indicators, adjustable trading bots with additional functions allowing users to develop their own strategies suitable both for experienced traders and beginners.
The Smart Trade Terminal offers TradingView indicators that can be used in conjunction with market analysis tools and a range of functions for opening/closing trades and Stop Loss and Take Profit settings.
In addition to the manual settings, the platform also offers ready-made trading strategies and an option to reproduce experienced traders’ strategies, which can also be adjusted and executed without any programming skills. Options bots are also available for experienced traders, while beginners can trade using signals from professional traders available in the Signal Marketplace.
Apart from trading bots and instruments, 3Commas offers an educational blog and a responsive support team.
3Commas Trading bots give users the opportunity to make profits with minimal effort – choosing the desired functionality based on their skills, goals, and abilities.
For example, one of the bots available on the platform is the algorithmic DCA bot, which allows you to automatically enter trades over a certain period of time, thereby averaging the entry price. All you need to do is choose an asset and set a time range for the bot to function.
The 3Commas trading bots have a wide range of different settings, adding flexibility to fit any trader’s needs. There is a choice of ready-to-trade bots for beginners, while experienced traders can benefit from creating customized strategies.
The trading platform connects to the user’s exchange account using API keys, which permit the bot to trade on behalf of the user. 3Commas is a versatile tool for traders with any background as it provides users with detailed statistics for each of the bots and allows them to track the effectiveness of other people’s portfolios.
3Commas is one of the leading trading platforms on the market. The functionality available to users is constantly expanding and the number of exchanges compatible with the platform is growing. The user-friendly interface, the ability to reproduce other people’s trades and a broad functionality to create your own strategies make 3Commas an excellent cryptocurrency trading solution both for experienced traders and beginners alike.
Choose a service plan to access the platform. Depending on the functionality provided and the list of features, the tariffs are divided into “Starter”, “Advanced” and “Pro,” costing $14.5, $24.5 and $49.5 per month, respectively.
The “Pro” subscription provides an unlimited number of exchange accounts, access to the SmartTrade trading terminal and its features, as well as the ability to connect to Binance Futures, Bitmex, Bybit trading bots and access their setup.
To get acquainted with the platform, trading bots and trading tools, all new users have free three-day access to the “Pro” interface.
The trading tools provided by the 3Commas platform are supported by 23 major cryptocurrency exchanges, including Binance, Bitmex, Okex, Kraken, Coinbase Pro and many more.
There are many simple, off the shelf automated crypto trading bots available for purchase, subscription or free download. Their value proposition is simple – offering traders the ability to automate their trades, and wait for the bot to make profits. This is not always the case, however. While basic bots can be connected to a user’s exchange account and can execute buy/sell orders automatically, users have limited control over the bot’s strategy making them less useful for advanced traders.
These bots are ready to go ‘blackbox’ solution with few options for customization. Users have to rely on the programming skills and strategy of the orginal creator. The quality of these trading bots varies from good, to fair, to poor, to outright scams.
Identifying which crypto trading bots are able to turn a profit, and which are failed experiments, or worse, are designed to steal the user’s money is a daunting task. While a free crypto trading bot sounds like a good deal, free doesn’t mean quality, and the ‘best bot’really depends on a user’s needs and experience.
Another issue is that off the shelf bots are limited and don’t consider all the factors that make markets move. They can be caught out by unexpected factors such as a flash crash, exchange hack or major news event. Events of this kind make the crypto markets the very volatile and without human supervision these bots can make unprofitable trades that result in user losses.
As a result, in 2021, the trend will continue to be towards customizable trading platforms that give traders granular control of their trading strategy with automated rebalancing strategies to protect profits. These platforms offer a range of other features including social integrations, back-testing, paper trading, a community, support, copy trading, portfolio tracking, auto-portfolio rebalancing and more.
Some of the advantages of using a crypto trading bot platform include:
Unlike traditional markets crypto markets never sleep and it is possible to transact in today’s global crypto economy 24/7. For traders this presents a dilemma — nobody can watch the market all the time. Crypto market participants will be familiar with the thrill of waking up to a portfolio gain, and the reverse is equally true — traders with open positions risk waking up to a negative news event that has adversely affected a position leading to a loss.
This is the number one advantage that automated trading and crypto bots provide: efficient, rules-driven trading without having to watch the markets. Even active crypto traders are sometimes unable to dedicate time to the markets. Automated trading strategies provide the means to generate trading profits without being tied to a screen.
A bot is always online and can relentlessly hunt the markets for an opportunity to make a profit 24/7. The volatile crypto markets can change very quickly, and bots are always ready to exploit a change in market conditions. Depending on what parameters have been set, once the bot sees the opportunity, it will execute.
Traditional day trading is one of the most stressful occupations on the planet. The volatility in the crypto markets amplifies this stress even more. Crypto trading can be a rollercoaster of emotions, characterized by extreme highs and lows. Humans are emotional creatures and prone to many biases that affect decision making. This can lead to costly miscalculations in the high-stakes world of crypto trading. A rules-based, crypto bot trading strategy can help protect a trader from their own worst enemy – themself.
Unlike stocks, crypto assets don’t pay dividends. From an investment perspective, crypto assets can be viewed more like a commodity. However, in a bear market there is no reason to hold on to a commodity as it doesn’t deliver a return aside from price appreciation, which is unlikely in bearish conditions.
Trading bots can provide crypto holders with a passive income, by leveraging their crypto assets via trades. This income stream is not as safe or reliable as crypto compounding interest, but it is one of the few options available to crypto investors who intend to hold their assets for the long term.
If a trader can create an automated trading strategy that performs well over a consistent period, it may generate a long-term passive income. Copy trading platforms allow investors with no trading experience to ‘copy’ the trades of professional traders, or to copy pre-set algorithmic trading strategies run by the platforms.
Trading is often compared to poker, and in poker, there’s a concept called ‘Table Selection’. This simply means a player can choose whom they play against. If the goal is to make a profit, given the choice, a rational poker player will choose to play at a table of weaker, less experienced players. Trading in the traditional financial markets is like sitting down at a table of professionals. It’s possible to win but you’ve got to be one of the best in the world. Cryptocurrency traders, however, are generally less experienced. There are some professionals, but the majority are retail investors.
This is another way of saying that crypto traders are less sophisticated than forex traders. This uncomfortable truth, combined with several factors unique to the crypto markets, has the potential to give savvy crypto traders an edge. Combine that edge with a backtested, algorithmic trading strategy (a crypto trading bot) and traders will give themselves the best chance to succeed.
The crypto market is often described as the ‘wild west’ because the market is largely unregulated. Every country and exchange has different requirements, and there are no global, standardized regulations. There is not yet an agreed-upon model for the reliable valuation of crypto assets. This regulatory uncertainty, the possibility of market manipulation, and ongoing price discovery create the trader’s best friend – volatility.
Automated trading bots are designed to be configurable to allow for a wide variety of trading strategies. From a simple trend-following strategy to more complex strategies that evaluate a wide range of data points, today’s bots are highly customizable. Common strategies include:
A trend following strategy aims to identify the directional movement of an asset and gain from the momentum of this movement. The strategy will go long when the asset is trending upwards or go short when the asset is trending downwards.
Arbitrage trading looks to exploit the difference in the price of an asset between different markets or exchanges. As a new and emerging market, the spread between different crypto exchanges can vary, though this has tightened as the market grows.
A market making strategy is based on continuously buying and selling crypto assets (on both sides of the order book) to capture the spread between the buy and sell price as the price fluctuates.
Copy trading is a growing trend that allows users to automatically copy another trader’s trade. Copy trading often involves a social community and gamification elements such as a leaderboard. The rise of DeFi and the emergence of non-custodial platforms such as TokenSets means it is now possible to copy other traders, or take advantage of algorithmic trading strategies without giving up control of your private keys.
Trading bots and algorithmic trading strategies are simply a tool and there is no guarantee of profitability. There are also a number of risks associated with trading bots and automated platforms. It’s important to understand that trading bots are generally designed for traders, not investors, and some are not appropriate for people new to crypto or new to trading.
If you’re a casual investor intending to buy and hold crypto assets, a complex black box trading bot strategy may not be appropriate. Investors with no trading experience can opt to ‘copy’ other traders or use existing algorithmic strategies on a trading platform. While platforms vary in their complexity, users with some financial literacy, analytical skills, and trading knowledge will have an advantage over those that don’t.
Unregulated, emerging boom markets and new technology tend to attract bad actors. Some crypto trading bots are designed to exploit unsophisticated traders by stealing personal data and funds. Do your due diligence. How? Ask yourself how credible is the team that created the bot or platform? Do they have a public profile? A support team? Can they be contacted? Do they have a community of satisfied customers? Are the fees clearly explained and easy to understand? Are there any hidden costs?
While you can set and forget most cryptocurrency trading bots, the best solution is a combination of automated trading with ongoing human supervision. Crypto market conditions can change extremely fast so it’s important for traders to ensure they are constantly adjusting the parameters of their strategy to reflect this.
The volatility in the crypto markets makes crypto trading the riskiest of all. Bots can be buggy, can suffer from poor programming, and can be caught out by unusual market conditions like flash crashs or major news events. Expect the unexpected.
An overview of several leading DeFi and CeFi crypto lending platforms and who offers the highest crypto interest rates.
While mining bitcoin on an individual computer is no longer viable, there are other cryptocurrencies that you can still mine at home if you’re prepared to put in the effort.
Crypto trading platform announces a new Algorithm Intelligence (A.I.) feature that cuts to the chase for what used to be a time-consuming process.