Crypto trading bots allow automating trade and increasing the efficiency of trading operations. Besides, they allow optimizing the strategies, minimizing the human factor, and reacting to changes in the market in real time.
Some popular platforms include the following ones:
- Pionex;
- Dash 2 Trade;
- 3Commas;
- Cryptohopper.
The platforms offer a wide spectrum of instruments:
- Arbitration;
- Portfolio balancing;
- Trailing stops;
- Integration with leading crypto exchanges.
Reasons why you should consider automating crypt trade:
- An opportunity to trade round-the-clock without monitoring the market;
- Analysis of large volumes of blockchain data;
- Fast speed of adjustment in the highly volatile crypto markets;
- Minimization of the emotional component of the trading process and reduction of the risk of impulse-driven decisions .
What is a trading bot?
Crypto trading bots are software applications that use algorithms for automated crypto trading. They make deals on the bases of preset parameters defined by the user. The bots are capable of operating 24/7 without any monitoring on the part of a human being.
The bots can analyze large volumes of data and make purchase/ sale decisions on the basis of the market conditions and signals. They make crypto trading more efficient.
Principles of operation of crypto trading bots
Crypto trading bots operate on the basis of algorithms specified by the user. The user determines the trading strategy and chooses indicators such as the price, the volume, and the liquidity, for example. The application, in its turn, makes deals in accordance with the set parameters.
The bots can perform various tasks including the following ones:
- Arbitration (purchase of crypto at one exchange and sale at another at a higher price);
- Portfolio balancing (maintaining a specified ratio of assets in the portfolio);
- Cost averaging (purchasing an asset on a regular basis to reduce volatility).
Thanks to these functions, trading bots are becoming obligatory for active traders and corporate investors.
Differences between traditional and AI-based trading bots
Traditional crypto trading bots work on the basis of fixed algorithms set by the user. They strictly follow the instructions and they are unable to self-learn. Such bots are suitable for simple tasks that do not require a high speed of operations.
AI-based systems, in their turn, can analyze historical data, learn from them, and change their trading strategies depending on the market conditions. Their expertise allows AI-based bots to forecast the market tendencies and optimize their activities to make higher profits. Cryptohopper and other platforms offer AI-bots that improve the scripts based on the analysis and tests of historical data.
Advantages of crypt trading bots
Cryptocurrency traders have been integrating automated solutions in their strategies. If used wisely, these solutions can improve the efficiency of the trade operations significantly.
High accuracy and speed of order execution
Trade systems analyze huge volumes of data and make decisions much faster than humans do. This is important in the highly volatile crypto markets where prices can change in a heartbeat. Automated assistants can execute orders instantly, which allows using the market opportunities and minimizing slips.
Opportunity for round-the-clock trade
Cryptocurrency exchanges work 24/7 and trading bots are capable of working non-stop, never missing any trade opportunities. They can make deals automatically even when the trader is asleep or busy with some other things. This is important for maximizing profits: the cryptocurrency market is never closed and significant changes can take place at any time.
Minimization of human errors
Bot trading excludes the human factor from the decision-making process. It helps avoid mistakes attributable to emotions and fatigue. Fear or greed may lead to poor decisions driven by impulses. Trading bots, on the contrary, have no emotions and they demonstrate a perfectly rational approach to trading. They use only objective criteria, which lessens risks and increases stability of the results.
How to choose a trading bot
The trader’s results will depend on the trading bot that he/ she chooses to a large degree. Crypto traders point out several important criteria that you should take into account when choosing the trading bot to use.
Reliability and good reputation
First of all, you have to choose a trading bot that is reliable and popular in the market. Прежде всего, важно выбирать торгового бота с хорошей репутацией и надежностью. Check user reviews and find out about the developers’ team. Reliable bots will have positive reviews, work in a stable manner, and receive updates regularly. This guarantees that the bot will be able to adapt to the changes in the market thus remaining an efficient trading instrument.
Supported functions
Different trading bots support different sets of functions – from simple algorithms to complex ones based on artificial intelligence and machine learning. For instance, some bots support the following functions:
- Arbitration strategies;
- Dollar Cost Averaging (DCA);
- Portfolio balancing;
- Trailing stops.
Opportunities for adjustments and adaptations to individual preferences and risk tolerance are also important. You have to ascertain that the bot you are considering is flexible enough.
Usability and interface
The bot’s interface should be intuitive to use, which is especially valuable for a beginner crypto trader. Such platforms as CryptoHopper and Coinrule, for instance, have easy-to-use interfaces and adjustable software instruments. Availability of training materials and client support services also simplify the use of an automated assistant.
Cost and commissions
The cost of the crypto trading bot and the commissions that it charges are also an important factor. Some platforms such as Coinrule and CryptoHopper, for example, offer free basic plans with limited features, with more advanced plans available on a subscription basis. In addition, experts recommend monitoring the amounts of commissions because different platforms charge different commissions that can also depend on the chosen.
Review of the best crypto trading bots
There is a rather wide choice of crypto trading bots and each platform has certain unique advantages. Below we briefly describe some popular bots.
OKX
OKX bot allows for futures and marginal trading. It also allows copying the strategies of successful traders. It takes little time to tune the bot and the fact that it is easy to use attracts many traders with different levels of experience. The platform does not charge any flat fee but it charges commissions instead – from 0.03% to 0.15%.
Pionex
Pionex stands out for its 16 free built-in applications that allow the user to optimize trading operations without having to adjust API. The bot supports arbitration and cost averaging. The commission is 0.05%, which makes Pionex one of the most affordable crypto trading bot.
3Commas
3Commas is popular due to high-quality training materials, efficient portfolio management instruments, and availability of several trading strategies. The platform supports trailing stops, portfolio balancing, and plan testing. There is a free plan and three premium plans (from US$ 22 to US$ 74 per month).
Learn2Trade
Learn2Trade is known for its high-profit trade signals and a copy-trading service. The platform allows trading around the clock and gives access to experienced traders’ strategies. Four payment plans are available including a free one. Premium plans give access to trade signals and copy-trading functions.
CryptoHopper
CryptoHopper offers several trading indicators and it is integrated with large exchanges including Binance, Coinbase, Kraken, and others. The platform supports the following functions:
- Strategy testing;
- Trailing stops;
- Take-profit;
- Arbitration.
A free trial version is available as well as three payment plans from US$ 19 to US$ 99 per month.
Kryll
Kryll is a powerful machine with a user-friendly interface. The bot allows making and testing deals. It also offers a trading platform where you can rent or sell trading strategies. Six payment plans are available including a free one. The monthly fee depends on the amount of cryptocurrency operations.
Mizar
Mizar offers the following opportunities:
- Copy trading;
- Take profit;
- Stop loss;
- Sliding stop.
The bot is easy to use and it is integrated with major crypto exchanges. There is no fixed monthly fee and the commission depends on the volume of transactions.
Cryptorobotics
With Cryptorobotics, you can automatically trade, distribute investments, and cooperate with other platforms. The bot supports several trading scripts and market analysis instruments. Flexible pricing plans give access to different numbers of opportunities.
The future of crypto trading bots
The central tendency in the development of crypto trading bots is the involvement of AI and machine learning in the process. These technologies analyze the current market data and predict future trends. The algorithms are expected to keep improving in 2024. The innovations will allow the bots to adapt to the changing market conditions in real time. The main tendencies include the following ones:
- Development of arbitration strategies;
- Social trading;
- Improvement of risk management instruments.
The involvement of AI in trading algorithms opens new opportunities for automating trade and optimizing the trading strategies in the cryptocurrency markets. AI-bots improve risk management by dynamically adjusting the trading processes depending on the market conditions. Because the bots learn from historical data, they become more knowledgeable with time. In the future, trading bots based on AI will be able to give accurate predictions and suggest better strategies, which will make them even more attractive for private and corporate investors.
A company trading in cryptocurrency has to have a crypto license. The license will make operations with cryptocurrencies legal and protect the company’s clients.
Conclusion
The use of crypto trading bots brings the following advantages:
- Accuracy and high speed of order execution;
- Round-the-clock trade;
- Minimization of human errors.
Modern trading platforms such as Pionex, 3Commas, and CryptoHopper, for example, offer various instruments to users.
Beginners will be well-advised to choose the bots with user-friendly interfaces and training materials such as 3Commas or CryptoHopper. These platforms also offer free trial versions and flexible tariffs. Experienced traders would benefit from more complicated and adjustable trading bots such as Kryll or Gunbot. The platforms offer extended sets of functions and allow for detailed strategy adjustments.
Crypto business qualifies as high-risk business and our experts will gladly give you a free consultation on setting up an account with a payment system for your crypto company. Please contact us without hesitation!
20 June 2024 