One of the trends that are most talked about currently is cryptocurrency. But, they are extremely risky. This article will teach you how to trade crypto with confidence.
6 of the Best Crypto Trading Bots Strategies
Automated computer programs that trade in cryptocurrency are referred to as cryptocurrency trading bots. Their aim is to earn as much money for their customers as they can. They accomplish this by continuously watching the market and reacting in accordance with pre-determined rules. You can alter the way in which the bot evaluates market events like quantity, order, price time, and more, according to your preference.
Trading Bots – A little background
Richard Donchian, a 1949 creator of automated trading systems, developed a set of rules that let him purchase and sell funds. Famous traders like John Henry adopted the idea of trading based on rules in the late 1980s. Trading bots have become a popular segment of the market ever since. They are usually expensive and are not available to the common investor. Bloomberg terminals are more than $10,000.
Two major reasons to use trading bots include: The first is that they are used by investors to reduce the complexity and speed up the whole process. Bots can handle things like diversification of portfolios index building and portfolio rebalancing, and more.
The second scenario is more complicated and sophisticated. The bot is trying to outdo the market and earn steady profits in this case. This strategy isn’t without challenges.
The game has completely changed by introducing the advent of cryptocurrency trading. The market for cryptocurrency is open at all hours of the day and extremely volatile. This is why bots are more crucial than ever. A lot of people trade Bitcoin in a passive manner and do not have the time or capacity to conduct a dynamic analysis of market trends. Bots for trading in cryptocurrency can be a fantastic instrument for trading with efficiency.
The basic building blocks of a bot for trading crypto
These are the characteristics that all bots for trading share:
- Backtesting.
- Strategy Implementation.
- Execution.
- Job scheduler.
#1 Backtesting
Test your bots back against historical market data prior to deciding to make trades. The backtest should be as precise as is possible. This is done by taking into account slippage, latency, and trading costs.
The exchange API interface lets you collect market data that is of the highest quality. Libraries like CCXT let you connect with various exchanges.
#2 Strategy Implementation
It is essential to decide the strategy for trading your bot is going to employ. This is the time to determine the logic and calculations that your bot will employ to determine when and which trades to take. To test how the strategy works, test it back after you’ve created it. In the next moment, we will go over the methods you can employ.
#3 Execution
Have you re-tested your plan.
The next step is to run it in real-time. The bot converts your logic into it to API requests that the exchange can understand. It is possible to make use of fake money to replicate your strategy using bots.
#4 Job Scheduler
Once you have tested the strategies in real-world situations It is now time to automate the entire procedure. In order to automate the trading strategy, you’ll need to develop an appointment scheduler.
What is the best time to use crypto trading bots?
This issue was briefly discussed previously. But, there are numerous functions that a properly-coded robot could do for you, such as managing portfolios, rebalancing, and intelligent order routing. When it comes to programming and selecting your bots they should follow these basic rules of automation.
Automation doesn’t mean that you are totally hands-off. It doesn’t mean that you have to give up your touch.
It is recommended to automate the most tedious and time-consuming tasks that could create unnecessary problems.
What can bots in the trading industry do to help your business? Let’s look at it in depth.
#1 Repetitive Tasks
The repetitive administrative tasks that you do can consume lots of time and effort. time. It is possible to “copy and paste” specific tasks using an automated trading system to create trades swiftly. Bots can be an excellent help with repetitive tasks, such as periodic Rebalancing. It is only possible to do daily rebalances when you are managing an hourly portfolio. There are two choices.
For a rebalanced portfolio, set an alarm for one hour, and you’ll lose your sanity.
You can build an automated trading bot that will adjust your portfolio’s balance at the time it is made up to the time it expires.
#2 Timing
The process of trading requires precision and timing. Every trade you make will be a major influence on the potential earnings you earn. Let’s take a look at an illustration. Let’s say that the price of Bitcoin is declining and you wish your Bitcoin position to be sold once it hits the $8,750 support threshold. It is important to be attentive and patiently monitor the price chart before pulling the trigger. It’s easy to program the bot to track the market and make trades at the appropriate times.
#3 Day trading can be an opportunity to work full-time
There are numerous responsibilities we must fulfill each day. This can make it challenging for us to sit in front of the computer and look at the price charts all day long. Imagine the stress you’ll face when your portfolio isn’t carefully thought out and varied! It might not be feasible to conduct all the research you must do every day. As we said trading is a series of tedious, time-consuming tasks. These tasks that are repetitive can be automated with an automated trading system which makes it simpler for you to finish your trades.
#4 The market is never quiet
The market for cryptocurrency is never closed, as we’ve stated previously. There are thousands of exchanges all across the globe that offer their services 24/7. It may sound amazing however the reality is that prices can fluctuate anytime. That means in order to make sure that your money is effectively leveraged effectively feasible, you need to be alert at all times and be attentive to the price charts. There are two options available because it’s not possible to achieve this.
It is necessary to leave for a while in order to earn the most money.
To automatize your strategies, you can utilize trading robots while you’re asleep.
5 Complications are easily reduced
Consider the smart order routing example.
It’s possible to channel trades via multiple trading pairs.
Every trading pair has to be carefully selected by the timing of its trade, the asset’s quantity as well as the trading price and pricing.
The entire process has to be completed within a specific period of time to prevent the market conditions from changing.
It’s easy to comprehend, doesn’t it? It’s not simple to master this skill. This is just one example of the many issues that training must take into consideration. Certain strategies could be almost impossible to apply.
These complicated strategies can be automated using trading bots.
What strategy should I incorporate into my bot’s code?
There are a variety of ways your bots could be programmed. This article was the source of information for this section.
#1 Mean Reversion
The concept of mean reversion relies on the basic assumption that if a cryptocurrency’s value fluctuates from its average then it will eventually return to the value it was at. This is true for both crypto and traditional markets. It is because of the psychology of markets. Imagine a cryptocurrency named “X” that has an average value of $1.
If the cost of X increases to $1.25 the traders will then sell the asset in huge amounts, which lowers the cost to $1.
Like the previous example If the price falls below $0.75 and the market will view this as an entry point and begin to accumulate the most money it can to push the price to $1.
#2 Momentum Trading
Momentum investors evaluate the market’s fluctuation and momentum. The best scenario is to ride a momentum wave that is positive and then to sell your investments immediately as the market slows. It is due to the idea that the prices of assets will rise above their normal levels, only to drop and then lose momentum. This is a crucial aspect in the sense that the timing of the buy-in and sell-off is crucial.
#3 Arbitrage
Different exchanges may offer different prices for assets. This is because of the price fluctuation across markets.
The Arbitrage strategy lets you gain profit from trading and buying using the same exchange. You’ll need to sell X and purchase the other X to make the most of these price differentials.
#4 Naive Bayes
Machine learning is utilized in the Naive Bayes trading algorithm to determine the probability of an event. It is possible to provide pertinent information to your bots so that they will determine the most appropriate time to enter and exit.
#5 Natural Language Processing, (NLP).
The value of a cryptocurrency asset can vary dramatically based on the news that is fundamental, such as tweets or news articles. NLP programming is a way to train bots on how to programmatically interpret phrases, words, and the sentiment behind them. Eg. News about partners is usually positive. If your bot can find an article that says “X collaborates with B to increase mainstream adoption,” then it should begin to accumulate this asset.
Different Types of Cryptocurrency Trading Bots
Five major kinds of cryptocurrency trading robots:
- Arbitrage bots.
- Bots for market making.
- Algorithmic trading robots.
- Robots for trading in technical terms
- Profile automation bots.
#1 Arbitrage Bots
The bots are hardcoded using an arbitrage technique. Blackbird is among the top arbitrage bots available on the market.
Blackbird Bitcoin Arbitrage makes use of C++ to perform short and long-term arbitrage between Bitcoin exchanges. While the code isn’t 100% accurate, it can be utilized for no cost. Blackbird does not offer Bitcoins however, it short-sells them on the market for short-term transactions. This is due to the following reasons:
This approach is non-biased to the market.
Using this strategy, one doesn’t need to transfer funds between bitcoin exchanges. Both selling and buying are executed on the same exchange however, they operate independently.
#2 Market Making Robots
Market-making bots make numerous purchase and sale orders in order to earn a quick profit. Eg. If X trades for $1 the bot will make an order to buy $0.99 as well as a sale request of $1.01. The bot will earn $0.02 when both orders are fulfilled. Haast is among the top profitable bots for the market.
The bot has been available since the year 2015 and is located in Rotterdam. The main characteristics of Haasbot that you need to be aware of:
There is a range of trading options. You can run up to 10 HassBots simultaneously, have access to 20 indicators, and apply various trading strategies. The major exchanges are available.
The program is simple to use even for novices. It does not require any modifications to its code.
It is hosted in the cloud, so you don’t requirements to download anything.
Three subscription choices are offered three options: 3, 6, and 12 months. Prices start at 0.04 BTC to a 3-month Beginner License and all the way to 0.32 BTC for an Advanced 12-month license.
#3 Algorithmic Trading Bots
It is a program that runs on code that creates and executes signals for buying and selling within the market. The bots comprise rules that indicate when to buy or sell and rules that determine when it is time to close the position. Furthermore, the rules decide the size of orders and their allocation. Trality is an extremely well-known software to create these bots. A trading bot that makes use of algorithms for trading
Trality lets traders with different levels of experience and skill develop automated trading bots and automate trades with its cloud-based, user-friendly, and intuitive ecosystem.
The built-in browser Python Code Editor lets you use its API as well as a list of technical analysis indicators to customize your bot. Trality’s experts love the prospect of trading outside the indicators of technical analysis. The real power of your bot is in its capacity to utilize math and statistics to enhance its effectiveness. The tool is able to automate all sophisticated trading strategies.
Trality also has an option called the “Rule Builder” for those who do not have the ability to write code. It allows users to automate their strategies and develop them without writing any code. Drag-and-drop interface lets you mix pre-defined strategies as well as technical analysis indicators into one.
- Tools for professionals and beginners
- Cloud-based platform that lets your algorithms be running 24/7
- Fast and reliable backtesting module.
- Modular pricing
- All major exchanges are supported
- Rich documentation
#4 Portfolio Automation Bots
The bots can help users build, maintain and build their desired portfolio. They are designed to automate boring, repetitive tasks. HoldBot is an excellent illustration of an automated portfolio management system.
Hodlbot maintains an index of the 20 most valuable coins in relation to the square root of market capital. Hodlbot HodlBot will automatically adjust your portfolio whenever the price fluctuates, by selling assets that are not performing and then purchasing them back. Here are a few options that Hodlbot must be aware of:
There is no need to enter any other codes.
It is possible to try it for seven days without cost before you’ll be charged $3 per month.
Advanced options for portfolio customization include automated rebalancing, as well as adjustable time intervals
It includes well-researched market indexes as well as backtesting tools.
#5 Trade Technical Bots
Bots for trading with technical aspects are the ideal all-time friend of traders who are conservative. They’re among the most frequently used and well-known bots available on the market. They use indicators and signals to predict the future price movement and use them to make money. 3Commasis is among the most well-known technological trading bots.
3Commas provides an online interface that does not require downloads.
There is no need to modify the code in the backend.
There are two subscription levels that are available: Basic and Pro. The Basic plan is $25 per month. The Pro plan costs $84 per month. It comes with a lot of features and is priced lower.
It is able to execute different strategies that are based on technical indicators.
It is supported by the majority of well-known exchanges.
#6 Automated Crypto Trade
Bitsgap is well-known for its trading bots that are automated. Bitsgap is utilized daily by thousands of traders with diverse backgrounds and levels of skill to streamline their trading.
Bitsgap’s algorithm is built on an easy but efficient method called GRID. It distributes investments proportionally within the trading range that has been defined by the trader. The bot creates an order for a purchase whenever the limit order for buy is filled. A new purchase order is created under any sale order. The bot trades non-stop so long as the price is not higher than the trading range.
The Bitsgap algorithm makes the most profit by purchasing low and then selling high as the price rises. Automated bots have all risk-control options including Trailing-UP and Stop-loss. They also come with Taking Profit as well as a variety of exit strategies.
This video will demonstrate how the Bitsgap cryptocurrency bot for trading functions.
- Cloud-based, which means there’s no requirement to download anything.
- Trading bots are built upon an efficient and transparent logic
- Simulator to trade in DEMO mode, which is completely risk-free
- Backtested Strategies for a quick bot start
- 14-day trial for free
#7 Pre-programmed bots
Certain platforms have robots that handle all programming on your behalf. All you have to do is inform the bot of the location and amount you wish to trade. Other parameters can be set, for instance, the duration it will be running and the time you’d like to make profits or end losing.
CryptX Terminal offers one of the largest selections of pre-programmed robots that are available with an easy-to-use platform, and at an affordable cost. CryptX offers a variety of portfolio management tools and trading strategies that include arbitrage and signal trading bots such as Bollinger Bands and MACD, OBV, and RSI. Accounts can be linked to the platform via an API key. Then you are able to launch your bots. It is also possible to access backtesting information to determine the performance of your bot against previous data.
Free accounts let you use one bot per day for at least two exchanges. Paid plans allow you to connect to all exchanges supported and run as many as 10 bots per day, with 10 backtests ($37/month) or unlimited backtests and 1,000 bots each day ($74/month). Other advantages include:
- Web-based interface that is compatible with all modern browsers
- It is not required to be a programmer
- A 30-day trial of a professional plan no cost
How do I select the most reliable crypto trading platform?
These are the key questions you should be asking yourself when deciding on the right trading robot:
Question 1 Is the team trustworthy?
It is possible to depend on a bot to handle your portfolio. It is crucial to make sure that the person who is behind it is of the highest level of quality and credibility. A quick checklist can assist you in this.
What is the number of years of expertise the team has?
What do they have to prove their qualifications?
Can they sustain and build a solid portfolio?
Does the bot’s function be properly documented?
Where do they receive their cash?
It is essential that your team members are transparent about their performance. They’ll be held accountable for their actions.
Question 2 Does the bot employ the same strategy that I’m looking for?
It is essential to choose the best bot to implement your strategy. It is recommended to visit the bot’s site to read the guides and reviews written by other users about the bot. It is also important to think about how involved you’ll be in the setup of the bot. It’s not logical to sign up for an automated system that requires more technical expertise.
Question 3: How reliable is the support of your team?
Then, you need to evaluate the quality of support provided by the team. Are you able to contact the team regarding general support or issues? A simple checklist that you can follow to prepare for the visit.
Do you have a community that is active for your company? The community is usually on platforms such as Telegram, Discord, or Reddit.
Does the team communicate with these communities?
Are developers able to provide regular updates or solutions to potential bugs?
Question #4: What’s the price?
The cost of the bot could be as low as zero or up to $1000 per month, which is what we have mentioned in the previous example. While it’s obvious that paid bots will offer superior service over those that are free, it is important to consider the advantages and disadvantages of using their services.
5th question: Does it adjust to the market?
Every bot executes the same strategy in a different way. If you’re a fan of a particular strategy it is important to determine whether the bot is able to execute it with success. Ineffective strategy execution could result in losses for your investment.
Question #6: Does it seem easy to use?
While they can be extremely helpful, however, the majority of trading bots can be extremely complex. It isn’t easy for someone who is new to get into the backend. It is essential to select the right bot for your experience level. It could be an ideal idea to select one that is easy to use even though it may not come with a lot of fancy features, especially if you’re just beginning your journey.
Crypto Trading Bots -Conclusion
Here you go. The robots for trading cryptocurrency can help you make profits from your investment. They can also eliminate some of the monotony, boredom stress, and boredom you’d experience if you were to perform the task manually. The bots aren’t designed to be universally useful, as you will see in the manual. It is essential to look over the bots and choose one that is able to meet your requirements.
FAQ
What is a trading bot?
Bots can handle things like diversification of portfolios index building and portfolio rebalancing, and more.
Why use bots?
Two major reasons to use trading bots include: The first is that they are used by investors to reduce the complexity and speed up the whole process.
What are the different scenarios?
The second scenario is more complicated and sophisticated.
What are the benefits of trading in cryptocurrency?
The market for cryptocurrency is open at all hours of the day and extremely volatile.
What is the best way to invest?
The best scenario is to ride a momentum wave that is positive and then to sell your investments immediately as the market slows.
What is Arbitrage?
#3 Arbitrage Different exchanges may offer different prices for assets.
What is Naive Bayes Machine Learning?
#4 Naive Bayes Machine learning is utilized in the Naive Bayes trading algorithm to determine the probability of an event.
What is NLP programming?
#5 Natural Language Processing, (NLP).
What is a cryptocurrency trading bot?
Automated computer programs that trade in cryptocurrency are referred to as cryptocurrency trading bots.
What are the characteristics of a bot for trading shares?
These are the characteristics that all bots for trading share: Backtesting. Strategy Implementation. Execution. Job scheduler.
What are the benefits of using an exchange API?
The exchange API interface lets you collect market data that is of the highest quality.
What is the logic behind bot trading?
This is the time to determine the logic and calculations that your bot will employ to determine when and which trades to take.
What are the benefits of bots in trading?
But, there are numerous functions that a properly-coded robot could do for you, such as managing portfolios, rebalancing, and intelligent order routing.
