How to use bots for cryptocurrency trading
The crypto industry is evaluated at just under $1 trillion with some assets demonstrating impressive resilience even during bear trends. Since the market works around the clock, using a crypto trading bot is a good idea for many retail traders trying to make money in this massive ecosystem. However, implementing an automation strategy can be challenging if you never used bots before.
What are crypto bot trading strategies?
Any automated trading strategy falls under the category of bot trading. Since the advent of the Forex market to the audience of lone retail traders utilizing the internet to access financial markets, this specific area has been expanding steadily. Automation was a logical progression for the new online-only brokerage business.
Crypto trading is often performed by specialized trading scripts that can make decisions without hesitation and usually outperform experienced traders in niche areas like intraday and spread trading. There are several reasons why bots are better suited for such strategies than humans:
- A cryptocurrency trading bot program is a service that operates nonstop and continuously to find additional trading chances. By employing a solid technique that is risk-free thanks to strategically established stop loss levels, you may operate numerous bots at once and profit from market volatility.
- Robots do not have many weaknesses that often devastate human traders. For example, many people make mistakes due to fear, anxiety, and tiredness. We often succumb to emotions and make decisions without thinking them through. Robots just act according to their instructions.
- Crypto trading bot software has an instant reaction and will immediately enter the market when a good opportunity is identified. Humans are way slower. We need to notice an alert, place an order manually, and wait for the server to receive our commands. It all takes valuable time that can turn a potentially profitable trade into a loss.
How to choose the best crypto trading bot?
The market is diluted with supply due to many companies offering their automation services. The demand is high and many platforms find customers despite providing a subpar product. You should use only industry-leading companies that have distinct advantages.
Here are some aspects requiring intense attention when choosing a good automation vendor:
- You need to have a choice. If a vendor does not have different types of robots available to its customers, it won’t make you an efficient trader. Investors demand all sorts of products from automation vendors. The best of them usually deliver. Take a closer look at the arsenal offered by the platform. Does it offer DCA buying and GRID bots? Does it have copy-trading?
- Pricing should never make you scratch your head. Some vendors have just a couple of plans and all of them are priced aggressively. Scalable platforms that cater to wide audiences of traders can afford to lower prices and offer flexible pricing. For example, WunderTrading has a basic plan that allows users to run a crypto trading bot for free.
- Integration is another important aspect! A contemporary automation platform must be compatible with other services and work relying on the philosophy of increased interoperability. A good vendor will be integrated with analytical websites like TradingView and many exchanges. Almost all popular CEX platforms have APIs to work with external services.
- Tutorials and instructions must to be thorough and instructive. Even though several businesses promise to provide crypto trading bots for beginners, such claims are frequently dubious given how scant their training and instructions are. Writing scripts might be difficult for someone without any technological knowledge.
How do crypto trading bots work?
Some bots are just scripts that can be readily deployed with some standard settings that you can change according to your requirements. For example, a DCA bot is a robot that uses the distributed cost average strategy to buy and sell assets. However, you can simply remove the instruction to sell and use it as a DCA robot to accumulate assets by purchasing them on the spot market.
Many companies have preset templates that can be quickly adjusted and launched without any additional tinkering.
However, you can also implement a more sophisticated strategy. If you want to use technical analysis and simply automate what you are usually doing, you can use custom scripts. These work within a very simple system involving three parts:
- TradingView is the most commonly used alert generator equipped with advanced technical indicators and its coding language that you can learn quickly.
- An automation vendor like WunderTrading that hosts bots and allows you to write scripts is another crucial part of the system.
- A crypto exchange that receives commands from bots and executes them immediately. You can connect any exchange that has an API to WunderTrading.
Should you use automation?
Remember that bots are just tools that you can use to great effect. However, a misused instrument is often harmful and can devastate your portfolio. Don’t forget to set stop loss conditions, back-test your strategies in TradingView, and do not risk more than you can afford to lose without suffering financially. No one can guarantee profitability and mind-boggling results, but good service will always provide everything you need to achieve them!
