What Is Automated Crypto Trading, And What Are the Best Crypto Trading Bots?
But there has to be a better way, doesn't it? The solution is taking advantage of modern technology and using automated crypto trading to work in your favor. Trading doesn’t have to be complicated when you can configure computer systems to automatically analyze, predict, and execute market orders in your name.
Let’s see how crypto automated trading really works. What types are there, and what are some of the platforms and services you should definitely check out to maximize your profits on cryptocurrency markets.
What Are Crypto Trading Bots?
Simply put, the term automated crypto trading refers to the use of special software called trading bots to buy and sell selected cryptocurrencies based on the instructions you gave it. Since the programs can operate autonomously, the trader doesn’t have to be present to manually press the ‘buy’ or ‘sell’ buttons on an exchange. By now, we are sure you can already see the benefits of automation and how much time such strategies can free up for you to focus on other things.
Crypto bots monitor market movements and use algorithms to execute orders with precision. These modern apps use various strategies and can buy or sell crypto at certain prices or when specific technical indicators are aligned. Compared to you and me, automated crypto trading is emotionless.
Is crypto bot trading profitable? Computer software will not succumb to emotions like fear, stress, or greed. That makes them ideal trading companions because even if you become attached to a digital asset, your crypto bot will sell it for profit in the blink of an eye.
Automated trading bots don’t get tired. They don’t need to rest, take breaks, go out for dinner, or watch a movie. We, the people, need all of that, and when we do, we can be sure that our digital helpers will continue the work for us. The app will always do what it was configured for by following the parameters provided to it.
Most crypto traders want to buy the dip and sell assets at their peak. But this isn’t an exact science, and waiting too long can result in failing to take profits. Bots don’t have those problems because hesitation is not part of their configuration.
Automated trading software can be tested in simulated environments before allowing the application to trade with real money. Following the results in demo mode lets you know what to expect in live market conditions.
A few seconds too early or too late differentiates a good trader from a less successful one. Crypto automated trading makes portfolio diversification easier. Working with dozens of coins on multiple markets can be troublesome for humans, but not for crypto bots.
What Types of Automated Crypto Trading Are There?
Crypto trading bots can essentially be divided into two types: APIs and blockchain-based.
Most automated crypto trading is done through APIs. An API is an Application Programming Interface where you can establish a connection between an account on a cryptocurrency exchange and that of the bot you are using. The software then gains access to your profile and is able to perform buy and sell actions instead of you.
The other type of automated trading uses the blockchain directly. It utilizes the code in smart contracts to perform financial activities autonomously. Since Ethereum is the world’s biggest smart contracts platform, most of these types of software reside on this network.
Automated bots can also be classified into 5 groups:
Arbitrage Bots
Arbitraged bot trading means buying cheaper on one exchange and selling higher on a different one to take advantage of the price difference and make a profit. This strategy often requires multiple trades back and forth since the margins might be minimal.
Coin Lending Bots
Coin lending bots can automatically lend coins to margin traders on cryptocurrency exchanges, which will eventually be paid back with interest.
Margin/Leverage Bots
If you can automate the lending process, you can also automate borrowing. Margin bots borrow coins from lenders to execute margin trades instead of humans.
Market-Making Bots
Market-making bots monitor crypto exchanges to provide liquidity for them. These tools can be configured to submit buy and sell orders above or beyond the asking price. They make a profit by purchasing a little cheaper when the value decreases and selling when the market goes up.
Technical Trading Bots
This type of automated software tries to predict future price trends based on specific signals or indicators. They can even copy and imitate your favorite crypto traders to perform the same market actions as them.
The Legal Side of Automated Crypto Trading
But is crypto bot trading legal? Using automated trading software is legal, and the cryptocurrency niche isn’t the only industry that takes advantage of them. They have their use in traditional stock markets, for example: Wall Street relies on various bots when it comes to fiat currency exchanges, bonds, and the equities market. Software is unquestionably faster and more efficient than people.
Depending on the jurisdiction, local laws and directives might regulate how crypto bots can be used. Not all automated trading software is legit and created with good intentions. Some don’t deliver everything they promise, and others can be plain scams. It’s important to remember that if trading or owning cryptocurrencies is considered illegal in your jurisdiction, the use of automated crypto trading tools can’t be allowed either.
The 4 Most Popular Platforms for Automated Crypto Trading
Fortunately, there is no shortage of crypto bots to choose from. In the segments below, you can read about 4 that are believed to be worth trying out.
WunderTrading
WunderTrading is an automated trading bot for cryptocurrencies like Bitcoin, Ethereum, etc. The software can be coupled with a long list of popular crypto exchanges like Coinbase, Binance, FTX, Bitfinex, and many others.
The bot can easily be set up and assimilate scripts from TradingView to achieve the best results. One of WunderTrading’s most sought-after features is Copy Trading. Namely, the software can monitor and follow what other traders are doing and copy their actions in real time.
This software can boast over 55.000 users and a monthly trading volume of almost $400 million.
Some of the bot’s options include take-profit, stop loss, spread trading, investing using the DCA method, arbitrage trading, account management, and a cryptocurrency portfolio tracker.
Coinrule
Coinrule is a crypto trading bot for beginners that allows them to perform automated market actions on exchanges such as Binance, Kraken, Coinbase, OKX, etc. All data fed into the software is encrypted and secured.
The bot is always vigorously searching for indicators that signal price rallies or dips to take advantage of the situation. How to automate crypto trading with Coinrule? This tool can work with over 200 unique rules and strategies to automatize your earnings.
It will sell assets that start dropping and exchange your coins for those that perform better. By managing the volatility, Coinrule increases your overall profits. And it does all that without requiring you to store your private keys or having withdrawal rights from exchanges.
Pionex
Pionex offers not just one of the market’s best crypto bots, but the team has also released an exchange where you can see the software in action. The trading platform supports around 350 different cryptocurrencies, which can be purchased or sold with maker-and-taker fees of only 0.05% per trade.
Their offer includes 16 automated crypto trading bots. Each one is configured to apply a unique strategy. Depending on what works best for the client, it’s possible to select one or use multiple to determine how they perform in live market conditions.
One popular choice among traders is the Grid Trading Bot, which is active around the clock and takes advantage of ups and downs to buy at low prices and sell high. The Leveraged Grid Bot completes automated orders with up to 5x leverage. Some other software worth testing include the DCA, Martingale, Rebalancing, or the Spot-Futures Arbitrage bots.
Cryptohopper
Cryptohopper is a newbie-friendly trading companion powered by AI technology. It automates your exchange activities and connects all the user’s CEX accounts to the same platform. Cryptohopper can be configured to buy or sell when the prices start moving in the right direction. A copy feature also allows users to duplicate trades from professional cryptocurrency traders.
This crypto automated trading tool comes with free trial accounts, where you can see it in action before purchasing a subscription package. There is also a simulated trading environment suitable for testing different strategies in demo mode with fun money.
Cryptohopper features professional tools like Market Triggers, DCA, Short Selling, Arbitrage, Market Making, and a top-notch charting script similar to TradingView. Advanced users can check out the marketplace, where it’s possible to buy signals, indicators, bot templates, and customized trading strategies not available elsewhere.
