Give your trading strategies and boost your buy-and-sell orders with our guide on Automated Crypto Trading using various cryptocurrency exchanges.
Gone are the days when paper trading was the only way of trading. With the crypto market in full bloom now, it is only a matter of time before every global citizen will be taking part in this mode of social trading, without the need to rely on web browsers as we can now utilize even a mobile app for this purpose.
What is Automated Crypto Trading?
Automated crypto trading platforms are automated software that trade cryptocurrency for their users. To use a trading platform, set up an online account with a crypto trading bot and select a trading strategy to use. Once a cryptocurrency trading bot has been selected, the program will buy and sell the cryptocurrency based on the software’s parameters.
Most automated crypto trading programs work as application programming interfaces (APIs), which are bots working as intermediaries and trading on behalf of their users on another exchange they connect to. For example, 3Commas is an API that can be used for automated trading on exchanges like Binance, Coinbase Pro, Bitmex, and Kraken.
The recent secure form of automated crypto trading uses the automated trading bots that operate on the blockchain. Now you can benefit from tokenized crypto trading that involves using smart contracts on the blockchain that are the code that performs fiscal functions autonomously. This code is usually uploaded to Ethereum’s network, the leading cryptocurrency supporting intelligent contracts.
Best Automated Crypto Trading Platforms and Bots
Automated trading platforms are available as multiple options now, each with pros and cons, depending on the individual needs. These platforms operate differently from each other, and the right trading bots include the type of cryptocurrency that the users want to trade in, the exchange they are already using, and the threshold of their risk tolerance.
- Coinrule is ideal for Preset Strategies
- Pionex Is ideal for Expanded Trading
- Trality is ideal for Advanced Traders
- WunderBit is ideal for Exchange Rates
- Botsfolio is ideal for Bot Trading
- hrimpy.io is ideal for Exchange Connectivity
- CryptoHopper is ideal for Beginners
- CryptoHero is ideal for Mobile App
- Tokensets is ideal for Blockchain
- Uniswap is ideal for Interest Rates
- Bitsgap is ideal for Customizability
Using a Crypto Trading Bot
Use a crypto trading bot if you think your trading strategy can beat the crypto market. Using a crypto trading bot never guarantees you’ll beat the market. Instead, it simply executes trades based on an algorithm.
A crypto trading bot is also valuable for diversifying your crypto holdings strategically. Like Tokensets, you can hold a singular token representing a trading strategy involving both Bitcoin and Ethereum based on the trading signals.
Picking a Trading Bot
Before you buy/trial/invest in any crypto trading bot, look for these crucial points:
- The professional experience level of the senior members of that firm: If they have a good track record, you are good to bat on them.
- Availability and popularity of their algorithms for all users: If they’ provide trade-level data then their algorithm is quite easily replicated. Whatever “edge” their bot has then is liable to be arbitraged.
- Success intentions: If they just hand you a platform and send you on your way to figure things out, it’s never a good sign unless you know exactly what you’re doing.
Types of Cryptocurrency Trading Bots
The significant types of crypto trading bots on the market today are the crypto trading bot APIs and decentralized crypto trading platforms.
- Crypto trading bot APIs: They are the most common form of crypto trading bots on the crypto market now. Crypto trading APIs connect with other cryptocurrency exchanges to manage the investments you make. This is a great option if you already possess a crypto brokerage account on well-known exchanges like Coinbase Pro, Kraken or Binance.
- Decentralized crypto trading platforms: These are the most secure way to use automated crypto trading. In this type of automated trading, blockchain technology is used to trade cryptocurrency autonomously. The funds are held in a smart contract on the blockchain, and you own a portion of the funds in it which is redeemable through cryptocurrency tokens issued by the trading platform.
Advantages of Automated Crypto Trades
Taking advantage of automated crypto trades com with some profound, significant benefits like:
- Timing: Since crypto bots trade based on software, they can buy and sell your cryptocurrency much faster than you could manually. If you’re trading based on a trading indicator, use a bot to place more precise market orders.
- Repetitive tasks: Most crypto bots on the market trade 24 hours a day, 7 days a week. If you trade cryptocurrency based on the market indicators, you can use a crypto trading bot to do the work for you.
- Consistency: Bots are much more consistent than humans, as bots are able to operate nonstop and always execute orders based on specific indicators. Oftentimes it’s hard to stay disciplined while trading cryptocurrencies, so using a trading bot eliminates the risk of “emotional trading”.
- Save time: Using a crypto trading bot will save you time because the program watches the market and executes trades for you. If you don’t want to constantly monitor cryptocurrency markets, then an automated trading bot is right for you.
Disadvantages of Automated Crypto Trades
On the downside, choosing automation can come with its disadvantages like the following:
- Security: Although crypto bots are generally secure, you need to hold your crypto funds on an exchange to use a trading bot. Holding your crypto in an exchange increases your risk of being hacked, but most large exchanges are generally safe. If you want to hold your cryptocurrency in a more secure way, you’ll need to use a hardware wallet.
- Monitoring: Even though the trading bot monitors the market for you, you still need to watch cryptocurrency prices to stop loss. This is because cryptocurrencies are very volatile, and your trading strategy may not align with the market conditions.
- Experience needed: Automated trading bots are best used by advanced traders. If you aren’t familiar with the trading indicators used by the trading bots, you probably shouldn’t use the bot.
Buy and Hold or Actively Trade?
Like I previously said, using a cryptocurrency trading bot doesn’t guarantee that you’ll conquer the market. Cryptocurrency can be unreliable, unpredictable, and very volatile, so a crypto trader trading on technical indicators doesn’t always get results. But some crypto trading bots have had a history of beating the market by a decent amount. If you are an advanced trader who carries out the trade and portfolio management based on technical indicators, use bot trades to save time and exercise more precise buy and sell orders.