Cryptocurrency Trading Bots: What is this?

Cryptocurrency trading bots are programs that automate trades so that a trader doesn’t have to watch the market all the time and can focus on other tasks. Cryptocurrencies are still one of the most interesting things happening right now. Digital coins became very popular very quickly, and they still have the reputation of being good investments that can make money on cryptocurrency exchanges or with long-term investments in these assets.

What’s a Crypto Trading Bot?

You already know that it is possible to trade on modern financial markets without a speculator being present at the auction. This is also true of cryptocurrency exchanges today, where a trader can make a steady profit by using the features of cryptobots well.

So, a cryptocurrency robot (or “bot”) is a special algorithm that uses different indicators and a software system (called a “scanner”) to find market entry points and make trades on the user’s behalf.

In an area like the cryptocurrency market that is growing so quickly, the ability to automate the trading process is in high demand. Traders who know how to code and write programs can make their own cryptobots or make existing advisors work better for trading digital coins. The robot will trade cryptographic assets on its own, making money for the person who owns it.

But there is a big risk here, which new and inexperienced crypto traders don’t seem to care about for some reason. Every day, dozens or even hundreds of algorithms that automate trading in exchange instruments are put on the Web, but nobody knows how well they work. It’s easy to mess up the settings or start a bot that doesn’t work well at first. Of course, this will mean that the deposit will be gone quickly. So, it’s important to be careful when working with crypto robots after testing them on multiple demo accounts.

Types of Crypto Trading Bots

Types of cryptobots and their features (they often overlap on modern platforms, and many projects offer services in more than one direction or even in all directions at once):

Trading

They use indicators like SMA, RSI, MACD, etc. from technical analysis to decide whether to buy or sell an asset.

• Advanced

For advanced users. There is no strategy already built into the bot, so it can be completely changed to fit your needs.

• Scripting

For people who know how to write code. People take the open source code and change it to fit their needs. This lets you get the best possible result, thanks to the flexibility of development.

• Market makers

They add orders to the order book on both sides, which makes the market more liquid. If real traders show up during this process, their orders are immediately canceled and the bot keeps working.

• Alert

Help gather predictions from TradingView, social networks, blogs, the media, and other places. They send signals about changes in the market or make trading suggestions based on the data they receive.

• Arbitration

Focused on arbitrage within or between exchanges. Due to how volatile the cryptocurrency market is, these bots handle a lot of transactions and make some money. But it’s hard to find a good arbitrage bot because the more people who use them, the less money they make.

• Statistical arbitrage

They show how the prices of different coins tend to change over time and how they depend on each other. The user chooses which cryptocurrencies to look at, and he or she also chooses which ones to look at for the short and long term. Most of the time, people can’t use these kinds of cryptobots. Instead, hedge funds use them.

No bot is perfect and can do everything for you. Everywhere, you need to have a deep understanding of how the robot works and be able to set it up correctly. You should also try out the game first on a demo account.

Using cryptobots securely

You should be careful about who you give your API keys for your exchanges to. Only services with a good track record and a good name deserve this. In the end, an API key is a kind of permission to use your account, like trading through it or taking money out of it. Any bot needs an API in order to work, but this is not a sign of fraud by itself.

Learn as much as you can about each platform before you start using it. Find out what kind of security is used there. Always use two-factor authentication to keep other people from getting into your account.

Summary

On any stock exchange, speculators who want to trade manually need a lot of time and a lot of theoretical and practical training. You need to know how to trade and have knowledge of assets.

Trading crypto robots make it easy for beginners to get through these tough times on crypto exchanges. But it’s important to test the algorithm for automatic crypto trading, whether you bought it or got it for free.