It is not easy and simple at all to trade cryptocurrencies. However, there are many people who have mastered the skill of trading Bitcoins and Altcoins regularly and have become experts in this field.
The use of trading bots is becoming increasingly popular among cryptocurrency traders, who want to execute trades more quickly and effectively, and even while sleeping.
This is a detailed review of crypto trading bots in which we evaluate all the advantages. Furthermore, all possible risks that may arise from using them.
What are Trading Bots?
Automated trading bots are software programmes that connect to an exchange (typically through an API protocol) and perform orders on users’ behalf.
They use a range of trading indicators and techniques to execute their trades.
Trading is based on mathematics and rapid, complicated probability calculations. Therefore, bots should outperform humans in terms of trading performance.
Using a set of predetermined and pre-programmed rules, the bots make trading decisions by observing changes in the market price and reacting to those.
A crypto trading bot often analyses technical signs. It also tracks signals such as volume, orders, price, and time.
Most complex bots can be programmed to perform your personal trading strategy. That’s why they can be very useful if you have experience in the field.
Traditional markets also feature algorithms and bots. However, they are out of reach for most people because they are extremely sophisticated and expensive.
In the cryptocurrency markets, however, this is not the case, as you will see and read in this section.
Advantages
The best crypto trading bots are significantly more effective than humans. They are able to scan all available information about a certain crypto coins and conduct trades in seconds.
Bitcoin bots do not make decisions based on any sentiments or emotions; instead, they rely only on logic and algorithms to make their decisions.
As a result, their accuracy exceeds that of humans by a substantial margin.
Some trading bots have an accuracy rate of up to 99 per cent! A clear indicator that they make almost no mistakes while trading and almost no losses when trading.
Bitcoin bot trading is far more efficient than manual trading.
Rather than manually analysing the markets, opening an account on a cryptocurrency platform. Later, while waiting for verification, profitable trades, and going through the withdrawal process, the automated crypto trading bot takes care of everything.
It is less complicated than manual trading. All you have to do is make a deposit and leave the rest to the bot.
You will subsequently be able to withdraw your profits on a daily basis encountering no difficulties. Reputable trading bots, such as bitcoinscodepro.com, even provide customer support around the clock.
Possible Risks of Trading With Bitcoin Bots
However, while employing trading bots is not always a negative decision, it does come with certain risks.
Unsurprisingly, a high proportion of these individuals are beginners and inexperienced financial investors. They lack a comprehensive understanding of how the markets operate.
Trading in the financial markets entails risk. But the dangers involved with cryptocurrency trading are substantially greater than those associated with FX (foreign exchange) or stock trading.
The cryptocurrency market is evolving at a breakneck pace. Some coins gaining up to 500% in a single trading day.
If your bot makes a mistake and trades in the wrong direction, a loss of this magnitude can be incredibly devastating.
That is not to imply that trading bots are not accurate. However, there is always the possibility that trades will go badly.
After all, the vast majority of bots guarantee a 99 per cent win rate. Yet, there is a one-in-ten probability of making a mistake on a trade.
The Costs and Fees of Trading Bots
The prices and fees associated with trading bots are significant considerations. Due to the nature of the business, it is difficult to make broad statements about whether and to what degree you would suffer from those costs.
Essentially, the majority of reputable trading bots are subject to a charge. This means that you pay a usage cost. This can be either a one-time or a monthly fee, and in exchange, you receive access to the software.
Some brokers and exchanges offer a trading bot built into their platform. They can either be used for free or they must be asked for and paid for separately.
The amount of expenses or monthly fees charged varies depending on the service provider. Some platforms also provide many bots or a single bot with different functionality levels based on the platform.
You have to pay a fee, which will differ depending on the crypto trading bot you choose and the variety of functions it provides.
Other points to consider are fees, and expenditures associated with trading directly. Unlike the other parameters, these are not determined by the bot but will be calculated by the service provider.
You can find more detailed information on individual cost items and fees, particularly for the use of unique payment methods or individual cryptocurrencies, directly on the provider’s website.
When to Use Trading Bots?
Both experienced traders and those who are new to the cryptocurrency market can use bitcoin bots. They have built these in such a way that the user can pretty quickly learn how to handle them.
After you have set up all of your criteria and understand the risks involved, you can begin trading immediately.
It makes a lot of sense to experiment with a trading bot, especially if you don’t have a lot of spare time to learn about the markets.
Because the majority of individuals are far too stressed out by their daily lives or jobs, they lack the time required to become familiar with trading strategies, such as chart technology.
This is where trading bots come into play, since they can work for you around the clock, and all you have to do is sit back, relax, and wait for the bot to start producing money for you. Trading bots are particularly useful because they can work for you nonstop.
Are Bots Safe and Secure?
Yes, the best trading bots are protected by robust security measures that protect you from being hacked.
Because they connect to user accounts through third-party API applications, it is reasonable that some people are sceptical of bots. However, access to user accounts can be withdrawn at any time by deleting the API keys from the exchange’s site.
Here are a few strategies that should help ensure security:
- Keep your bot API keys safe and don’t give out any of your personal information to anyone.
- Keep your crypto wallet’s private keys safe at all times.
- Disabling automated withdrawals and performing them manually, despite the inconvenience, is preferable.
- Before selecting a cryptocurrency bot, conduct your own extensive research.
Types of Crypto Bot Strategies
Arbitrage
During the early days of cryptocurrency trading, the arbitrage method was one of the most common ways to make money.
The definition of arbitrage means purchasing assets in one cryptocurrency market and then selling them in another at a higher price in order to benefit from the difference between the two prices.
Given the decentralised nature of cryptocurrency exchanges, there were often significant variations between the prices quoted on different exchanges, allowing for arbitrage profits to be made.
With all the exchanges combined, there are already over 300 cryptocurrency exchanges listed on CoinMarketCap.
A trader (or bot) can trade back and forth with itself and generate a large amount of “fake” volume without being penalised when there are no fees charged on the exchange.
Because it’s impossible to tell how much of the volume is fabricated, they decided to simply remove it from the calculations entirely.
Because of the enormous number of cryptocurrency exchanges and the significant volatility of cryptocurrencies, traders potentially benefit from arbitrage opportunities.
Buy Low and Sell High
The possibility of making a risk-free profit after deducting transaction expenses is the basis of an arbitrage strategy.
Arbitrage, for example, happens when there is an opportunity to purchase something at a cheap price and sell it at a higher price right away.
Arbitrageurs are those who participate in arbitrage, such as a bank or a brokerage firm. We primarily use the phrase in the context of trading financial products, such as bonds, equities, derivatives, commodities, and currencies.
A single asset may have a varied price on different exchanges as a result of many available exchanges. For instance, the price of asset XYZ on exchange A is $10, whereas the price of the same asset on exchange B is $15.
In spite of the fact that spreads across cryptocurrency marketplaces are getting narrower by the day, they still exist, and crypto trading bots might assist traders in making the most of these variations.
One of The Best Crypto Trading Bots 2022
3commas
3Commas is a platform that allows you to configure the software yourself if you wish. During the early period of development, you were responsible for programming all the algorithms and functions of your software.
Anyone who did not yet understand much about cryptocurrency trading and who did not have a clearly defined plan would be unable to do anything with 3Commas.
Similarly complex are the DCA bots, the Grid bots, and the Options bots. All of them require a certain amount of trading knowledge to be used effectively.
Nevertheless, 3Commas has also adopted the StackedInvest technology and now provides ready-made bots that can be launched with relative ease.
It also displays your performance over the prior few days and months transparently.
Based on our previous experience with the company, before spending too much money on the 3Commas trading service, it is necessary to understand the process and how its auto trading bot operates.
However, the study showed that, with a brief investigation and an interest in the cryptocurrency market, it is possible to make money using 3Commas in some capacity.
The first DCA bot is completely free, and it can be used right away after connecting your wallet to the system.
Conclusion of the Trading Bot Review
As cryptocurrency trading grows in popularity throughout the world, new technologies are continuously being developed to make the process more efficient and more convenient for users.
Crypto trading bots are one example of this type of technology. Since they make it easier for traders to stay up to date on industry trends and make the best trades, they have become more popular in recent years.
If you are a newbie or an experienced trader, automated trading bots can be beneficial in both situations.
Individuals frequently make emotional decisions, and employing an automated crypto-trading system can significantly reduce the number of such decisions.
The trading bot makes judgments on its own and is available to trade for you at any time.
Even an algorithm-based system, however, cannot guarantee 100 per cent success. You must be aware of the risks that come with using one. If the market goes against you, you can not count any kind of profits.
Regardless, trading bots should have a much better chance of making you money in the long run.
So it’s only natural to give the whole thing a shot, hoping to maximise your personal wealth.