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  • Blog \ Crypto Trading Bots

    Crypto Trading Bots

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    Ilya Krupin
    CEO, HiCoTrading.com

    Becoming an efficient trader does not require wasting precious time on learning A-Z of the crypto trading profession from the market guru’s or reading countless expensive (or useless free ones;) tutorials over the Internet. So, going on and on with the pure desire to get their tasty profits from trading, people come to use help of the automated solutions, also which are known as crypto trading bots.

    What is it all about? A robot (or bot) is a program that has a specific algorithm, designed to buy or sell digital assets depending on the market situation. The first trading robots appeared back in 2012, and since then they have become more and more advanced. If the market player has decent experience with cryptocurrency trading, the profit can be very impressive. But what if you don’t have time or simply desire to learn something, but want to engage into cryptocurrency trading already right away?

    So, in order to enter the big and scary world of trading operations as profitably as possible and not to lose what you started with, in order to save time and effort, you can use bots for crypto trading. Go on with our new read and you will get the understanding of these programs as well as the benefits of different advanced solutions available on the market.

    Since we are talking about the specially designer robot, or simply put – the bot, you must get and idea what that is first of all. Despite this type of software appeared not so long ago, everyone can download most of the programs for free. However, as an algorithm, this approach had been used for a long time, especially in the classic financial markets and Forex, when trading binary options, etc.

    There are a lot of different programs for a crypto bot trading, the user have numerous options. The strategy chosen as the basis is responsible for the final result when using the program.
    Many beginners prefer to use automated crypto trading bots for convenience complement the likelihood of automated trading and emulating the trading positions of other successful investors.

    Do note, that many free crypto bots are mostly made by scammers.

    Bots for automatic cryptocurrency trading operate according to the special algorithms, trading strategies, which, in turn, are created on the basis of technical analysis. In addition, after determining the patterns of trading, the historical rate data is checked, the number of potential losses and profits is calculated, and only then the rules of the trading strategy for the cryptocurrency robot are created and the program engages into the market play.

    Types of crypto bots

    There are 4 main types of bots for cryptocurrency trading:

    • The Exchange bot – it operates on a trading platforms. The money are gained on different time frames – from short to long ones;
    • Arbitration bot – operates on two or more trading platforms, earns you money due to difference in rates between each of them;
    • The Telegram channel bot – it searches for buyers or sellers in the vast Telegram network;
    • Bots to collect cryptocurrency using “satoshi faucets” – this is an online service that distributes Satoshi or other cryptocurrency assets for free.

    Bots are usually developed for specific trading platforms. Most cryptocurrency exchanges have an API, and they generally have a positive attitude towards free crypto trading programs within their platform, unlike Forex brokers who only promote their bots or prohibit auto trading at large.

    Here is a list of exchanges which are not banned for crypto automated trading:

    • Bifinex
    • Poloniex
    • EXMO
    • Bitrix
    • Kraken
    • Bitstamp

    Many programs have a trial period of 10-30 days, during which you can try out the bot and find out how profitable this business can be for you.

    Where can you get the best bots for cryptocurrency? There are 3 options for obtaining robots for trading digital assets: Creating a program yourself, purchase or the free download.

    The benefits of bots for cryptocurrencies

    Bots, of course, do not belong to artificial intelligence systems and cannot constantly conduct error-free trading. However, they have some nice advantages:

    Saves your precious time

    You don’t need to sit and stare at the monitor for hours, researching the charts and trying to predict the rates of assets.

    Trade lengths

    Bots do not get tired, they do not need breaks, they can make the deals around the clock.

    Speed of decision making

    This is especially true when scalping, when the process goes in less than a second. Bots can earn on short timeframes, they do not panic and are able to react instantly to the market situation.

    Trading platforms coverage

    The cryptocurrency market sometimes behaves in an interesting way. On one exchange rate on a particular cryptocurrency can rise in a matter of hours in the tens or even hundreds of times. A person at this vital time can sleep or not be present near the computer.

    Competent and consistent strategy

    This goes only for decent and expensive bots. The advantage is that a well-thought strategy brings profit, if you do not deviate from it under the influence of emotions. Bot does not panic, not happy as crazy when it gets lucrative gains and does not do anything stupid.It seems that the robot on all counts turns out to be a better person. At the current stage of technology development, even with great progress, this is still not the case.

    What disadvantages are present though?

    Pattern of actions

    Bots are not capable of independent analysis or not able to understand when the market situation is changing. Accordingly, errors begin, which can lead to a complete loss of your deposit.

    Lack of emotions can be an advantage on the one hand, a disadvantage on the other. The fact is that a person, after a certain number of trades lost, can decide to stop trading at all, for example. After some time, he may be back and start working again. The bot will trade until it is stopped by the trader, or the funds on the account run out.

    The need for constant control and monitoring by the trader. This is an important disadvantage, which negates almost all the advantages. The fact is that the robot can not be left to work on their own during a significant amount of time.

    The bots can be not very efficient when trading in the negative. If they bought the cryptocurrency, the rate of which began to fall, they will not be able to sell it until it rises. And this may not happen for months though.

    Some bots can charge commission for each transaction, and the minimum amount of purchase or sale is very small. They make millions of trades and make money to their creators, while the trader would benefit from placing fewer larger orders.

    By itself, the algorithm may not be perfect enough and lead to the loss of potential profits.

    There are more serious disadvantages:

    Bots can contain a malicious script that does not manifest itself until a significant amount is accumulated on the wallet. After that, the wallet of its developer gets full of your hard-earned money.

    Some bots contain spyware that, when installed on your computer, hides from the anti-virus and collects personal data, such as passwords and PIN codes.

    There are programs that violate the stated conditions of their work. They can start trading not the currency pair that the trader has chosen, but the one that the developer wants to pump and so on…