Crypto trading is quickly gaining popularity in today’s market. After all, the unit being traded, cryptocurrencies, are defining a revolutionary era in currency transactions. Cryptocurrency is a hot and trending currency bringing massive changes to the financial industry.
These cryptocurrencies are touted as hyper-volatile assets. Compared with traditional markets, crypto trading happens round-the-clock, which is why crypto traders may sometimes find it difficult to react to price movements in a timely way. This is where the comes in handy. Crypto traders can leverage the pre-defined rules into these bots in order to execute the crypto trade in the most efficient manner possible.
Cryptocurrency trading refers to the act of speculation on the price movements of cryptocurrencies through a contract for differences or CFD trading account or buying and selling underlying coins through an exchange.
Crypto trading bots pertain to automated software that offers help in order for traders to buy and sell cryptocurrencies accurately and at the right timing. The main objective of crypto trading bots is to increase revenues while reducing risks and losses. These applications enable traders to manage their crypto exchange accounts in one location.
This discussion will take a deeper look at these crypto trading bots, studying how they work, who sets the criteria for the trades, the different types of bots available, the involved risks, and so much more. Read on.
How Crypto Trading Bots Work
As you learned a while ago, cryptocurrency trading bots refer to automated trading systems working on behalf of investors. These entities allow you to perform trades automatically when specified conditions for that particular trade are met. The crypto trading bot will take into account details, such as volatility levels and current prices. In other words, these bots can simplify the investment process, making crypto trading a whole lot easier.
Like in many other applications, bots can offer relatively better efficiency than humans, and these bots make fewer errors. They also do not yield to emotions or sentiments like what human beings fall into. These characteristics are helpful since the cryptocurrency market is notorious for drastic price movements.
What Crypto Trading Bots Offer
Most cryptocurrency trading bots provide the following services. Get to know these services as you read further.
Data Analysis
A crypto trading bot has the capability to scan raw market data from a wide range of sources, interpret these data, and deduce whether to buy or sell. Also, many of these bots allow users to customize the data types in order to provide refined results.
Risk Prediction
Regarded as a crucial feature of crypto trading bots, risk prediction is where bots leverage market data in order to estimate an asset’s potential risk. These details help the bot decide how much to trade or invest.
Buying And Selling Crypto Assets
Crypto trading bots also use the Application Programming Interface or API keys in order for them to buy or sell assets strategically. These API keys act as passwords that the bot will need so they can operate your account and make orders. This particular service is useful when investors want to avoid bulk token purchases.
What Are The Various Types Of Crypto Trading Bots?
Note that crypto trading bots are highly customizable. With this being said, investors like you can set the algorithm based on your short- or long-term investment plans. Up next are some of the most well-known types and kinds of crypto trading bots available today.
Arbitrage Bots
The arbitrage crypto trading bot is among the most popular types. They have the capability to compare different prices across various exchanges. With this, it makes trades benefit from the discrepancies in the price. Considering the high volatility in the cryptocurrency market, these kinds of bots help automatically set buy and sell orders whenever there are opportunities to earn profits. Thus, returns from the arbitrage bot can be marginal.
Trend Trading Bots
As the name implies, bots of this kind consider the momentum of particular assets before executing buy and sell orders on them. If the trend signifies a price increase, this bot triggers a long position. Likewise, when there is a price fall, it triggers a short position.
Coin Lending Bots
Coin lending bots let investors lend coins to margin traders in the form of a loan that would be returned with interest. Bots of this kind help investors automate the process. Because of this, they will spend less time looking for the right interest rate, thus, helping them acquire better rates.
However, beyond the information you have learned about crypto trading bots above, it is important to note that these bots are the only tools you can use to automate trading. They are not meant for everybody. It is very imperative you do your homework and conduct your own research before deciding on which bot to use so you would not end up with losses.
Furthermore, these crypto trading bots are also fraught with risks. Programming errors may hamper their efficiency like other bots used in many other applications. Keep in mind that these cryptocurrency trading bots work on the actions and conditions you set. Therefore, you must possess a good understanding of cryptocurrency and a sound investment strategy for this bot to work according to your advantage.
Lastly, we take a look at some of the best crypto trading bots investors can use.
Top 5 Crypto Trading Bots Today
Pionex
Pionex is considered one of the first exchanges worldwide, with 18 free trading bots. Crypto traders can automate their trading 24/7 without needing to always check the markets. It also aggregates the liquidity from Huobi Global and Binance. Pionex is also among the biggest Binance brokers.
Mudrex
The second on the list of the best cryptocurrency trading bots is Mudrex. This bot is a Y-Combinator-backed platform that has been around for quite some time now – since 2018, to be exact.
Its Coin Set offer is one of its most interesting features. It offers a separate algo offering but seems to be doubling down on these Coin Sets. According to Mudrex, these Coin Sets are basically tokens brackets built upon a particular theme or idea. Some of the most interesting Coin Sets are Crypto Blue Chip, NFT, and Metaverse.
Coinbase Pro
On the other hand, Coinbase pertains to a crypto exchange that prioritizes simplicity and security. Its Coinbase Pro platform is very advanced and capable of facilitating customers to employ trading bots to enhance their investment strategies with the use of automation, thereby boosting their investor portfolios’ efficiency.
Cryptohopper
Cryptohopper refers to a powerful crypto trading bot that provides many facilities to help traders make the right decisions. Bots on this platform are pertained to as hoppers that can either use templates, strategies, or signals that guide users on when to buy and sell the currency.
Coinrule
Operating since 2018, Coinrule is an advanced and easy-to-use crypto trading bot. This platform maintains its four-tier membership plan, which includes a free option that assists new investors as they get up and run.
The demands in the world of cryptocurrency trading are growing as each day passes by, also since more and more people are participating. With this being said, you need to adopt innovations to keep succeeding in the trade. Among these technologies are crypto trading bots.