Algorithmic crypto trading (also known as automatic trading, black-box trading, or algo-trading) is a method of placing trades that utilizes a computer program that follows a given series of instructions (an algorithm). In principle, the exchange will produce income more rapidly and frequently than any human trader can.
The specified sets of instructions are predefined and may be dependent on timing, price, quantity, or some mathematical model. Apart from profit prospects for traders, algo-trading increases market liquidity and makes trading more systematic by removing the influence of individual feelings on trading practices.
Algorithmic trading advantages:
- Trades are executed at the most competitive rates possible.
- The positioning of trade orders is instantaneous and precise (there is a high chance of execution at the desired levels).
- Trades are executed at the optimal moment and instantaneously to prevent major price fluctuations.
- Cost savings associated with transactions.
- Automated checks on various business conditions concurrently.
- Reduced chance of human error while trading.
- Backtesting algorithms against available historical and real-time data will determine if they are a successful trading technique.
- Reduced the likelihood of human traders making errors due to emotional and psychological causes.
Algorithmic trading allows purchases and sales of financial instruments on an exchange by using abstract algorithms, statistical equations, and human supervision. Algorithmic traders often use high-frequency trading technology, which enables businesses to execute tens of thousands of transactions per second. Algorithmic trading techniques can be applied to a range of scenarios, including order execution, arbitrage, and pattern trading.
Crypto Trading Bots
Crypto trading bots are computer programs that generate and send buy and sell orders to exchanges based on predefined trading laws. For instance, a very simple trading bot could be configured to sell ETH when the cryptocurrency's price reaches a specified level.
In a nutshell, cryptocurrency trading bots allow trading based on data and patterns, rather than on emotional instinct. In the end, this typically increases their earnings, reduces their risks, and limits their losses across exchanges. Additionally, bots can generate passive revenue 24 hours a day. When eating, biking, or making a presentation, or doing something else, you might be earning from automated trades.
Although there is an increasing number of sites that support automated trading, we've done the analysis and selected our favorites, along with some realistic sense and recommendations on how to make them work for you.
The Beauty of Crypto Bots
The cryptocurrency industry is ridden with extreme volatility. There are no closing hours in the crypto world. This increases the profitability of bitcoin and other cryptocurrencies when traded prudently, but also increases the possibility of major losses.
A bitcoin trading bot will assist in mitigating some of these risks.
Unlike humans, bots can make trades solely based on available evidence and patterns, excluding desires and instincts from the decision-making process. Additionally, bots can run 24 hours a day, allowing the user to continue trading even when they are sleeping or otherwise occupied.
Besides, trading bots have the advantage of working quicker and more effectively than a person trading manually. When configured properly, they are capable of analyzing data and executing transactions through several exchanges and cryptocurrencies. And that's just beautiful!
It's important to note that a trading bot is not a miracle cure. While the right bot, when used properly, will help you maximize your earnings, there are some disadvantages and risks to remember before installing a bitcoin trading bot.
You cannot simply start a bot and forget about it; you must monitor its performance and make necessary changes. Additionally, a bot may not consider external factors affecting the market, such as global events or breaking news, and therefore can make bad trades in the absence of human intervention.
While some bots come pre-programmed with trading techniques, the majority work better when customized to the user's requirements. Thus, the operator must have a working knowledge of the business and the technological aspects of trading with a bot.
Bitcoin trading bots connect with exchanges through Application Programming Interfaces (APIs), which ensures that two computers operate in unison without the intervention of a person. Due to the centralized existence of bots and exchanges, they are susceptible to hacking, so you will need to take precautions such as protecting your API key and disabling automatic withdrawals. Additionally, you can investigate the security background of any bot you are considering.
Top Algorithmic Apps in 2021
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3Commas: "Smart trading terminal and Auto Trading bots."
Quadency: "A more intelligent way to exchange and manage cryptocurrencies."
HaasOnline: "The world's most advanced automated crypto trade bots."
Cryptohopper: "Easy. Efficient. Innovative."
GunBot: "Community-made crypto trading bot."
Shrimpy: "The Social Trading Platform for Cryptocurrency."
Trality: "Code trading bots like a professional."
Bitsgap: "All-in-one trading platform for your Bitcoins and other Cryptocurrency."
"Smart Trading terminal and Auto Trading bots."
3Commas is a cloud-based trading platform for digital assets that includes a smart trading terminal, quick and composite trading bots, portfolio management, and mirror trading. The platform is available as a desktop or smartphone application and includes a dashboard with links to leading cryptocurrency exchanges. Users can conduct trades via the platform's SmartTrade terminal, which allows for the setting of trailing stop loss and take profit targets.
- Smart Trading terminal and Auto Trading bots: Advanced software for cryptocurrency traders to maximize gains while eliminating risk and loss.
- GRID Bot: Generates profit potential with little effort: You essentially pick a coin and an initial investment amount, and the bot will immediately purchase when the price declines and sell when the price increases.
- Dollar-Cost Averaging (DCA): A risk-reduction technique that involves investing at frequent intervals.
- Smart crypto trading terminal: Create the plan in a single, simple-to-use GUI using more than 20 trading indicators.
"A more intelligent way to exchange and manage cryptocurrencies."
The strongest aspect of Quadency is the backtesting capability, which enables you to do analysis based on facts and numbers rather than on hunches. It's also the most critical function for a crypto trading bot; it's always good to know the success of a crypto trading bot based on historical data before spending your money with it.
What distinguishes Quadency from the other bots on this list is its pre-defined automatic trading tactics and backtesting capability.
They have a free plan that is ideal for newcomers or passive investors in digital assets. The pro package begins at $49 which has a USD 100,000 monthly trading cap.
The free version includes all bots, and you can still switch to the pro plan for advanced functionality.
- Easy strategies, such as purchasing an asset (e.g. BTC) every day, week, or month, or more sophisticated strategies focused on technical analysis are available. The Accumulator bot will assist you in accomplishing this.
- Each Quandency bot is run in a safe, isolated environment within a private cloud that is strategically located near your exchange. This aids in reducing latency, but is slow to initiate.
At the time of writing, the following bots are available on the Quadency platform:
- Accumulator (DCA)
- Grid trader for grid trading
- Smart order
- MACD bot
- Market maker plus
- Bollinger bands
- Mean reversion bot
"The world's most advanced automated crypto trade bots."
HaasOnline is a unique paid cryptocurrency trading bot platform. As with the other trade bots listed, they provide regular pre-built trading bots for arbitrage and market-making strategies, as well as other tools.
- HaasOnline TradeServer: Automate your trading plans and reclaim your time for living. Reduce downtime by trading in your sleep, without sacrificing sleep, when you use our pre-built cryptocurrency trading bots or create your own using HaasScript.
- HaasOnline Cloud: Take advantage of the strength of HaasOnline's flagship product without the technological difficulty of managing your own case, and benefit from cloud management's simplicity. You'll be up and running in minutes on our stable enterprise infrastructure, which boasts a 99.9 percent uptime guarantee.
- HaasScript: HaasOnline created HaasScript to be the most sophisticated cryptographic scripting language available. HaasScript enables the development of sophisticated electronic trading algorithms, technical indicators, as well as the generation and interpretation of signals.
- Backtesting & Simulated trading: Utilize our robust backtesting engines to help you reduce your vulnerability to excessive harm. When refining your automatic trading strategy, you can choose between near price or order book-based pricing approaches.
"Easy. Efficient. Innovative."
Cryptohopper enjoys considerable influence: it supports over 100 tokens across 13 exchanges and boasts hundreds of thousands of users.
Paid membership which ranges from $20 to $100 a month cater to a broad range of users.
Beginners can discover an abundance of instructional tools, models, and triggers, while advanced users will plan and backtest their own techniques. Cryptohopper's extensive toolbox and user-friendly interface make it an excellent all-around option.
- Cryptohopper's unique A.I. is one of the most promising advances in electronic trading. This unique function backtests all the plans automatically and allows the A.I. to choose the optimal strategy for the current market.
- Automated trading: The most recent and biggest advancement in electronic trading. It enables traders to use their own trading tactics but have them executed by a bot.
- Exchange and market arbitrage: This feature will quickly become your new best friend. Due to supply and demand, prices between exchanges and pairs can vary. Benefit from price differentials without having to deduct funds from your exchange!
- Mirror a Pro trader: Mirror trading is a fully free service that enables you to purchase models, tactics, and signals and trade autonomously.
- Backtesting: Using the backtesting function, you can use historical data to forecast the future. Test your bot configurations, make necessary adjustments, and then deploy your backtested configurations to your trading bot.
- Dollar-Cost Averaging: Dollar Cost Averaging enables you to double or triple the return on a failed project. By reducing the weighted average price by DCA, you can mitigate any future packs.
- 30+ Indicators: Utilize a diverse set of metrics and incorporate them seamlessly into the hopper. Simply choose and click - no coding necessary.
"Community-made crypto trading bot."
Gunbot is one of the oldest and most successful cryptocurrency trading bots, having been launched in December 2016. Gunbot's active trading group now numbers over 7000 members and is growing at a breakneck rate. The bot is appropriate for both beginner and seasoned traders.
The app enables newcomers to quickly choose the pairs they want to exchange and then sit back and let the bot handle the rest.
For more seasoned traders, Gunbot provides amazing customization, with users quickly modifying precoded techniques to fit their trading tastes.
Gunbot's gui is very user-friendly, allowing traders to quickly imagine their buy and sell points.
- Powerful, easy-to-use trading bot: Benefit from the trading tactics by automating your trading. What differentiates Gunbot from other bots are its creative strategies, rapid response time, incredible adaptability, and amazing user community.
- Dynamic grid trading: It's DCA trading with fully dynamic purchasing and selling goals based on any market's existing support and resistance levels. The first few trades are reasonably aggressive; but, if the price declines, the tactic immediately converts to one that gradually accumulates at ever-increasing steps.
- Security: The app is installed on your device and does not pose security risks. API secrets used to link to exchanges are only stored on your local computer for security reasons.
- Support: Receive superior support for all things Gunbot. Utilize online tutorials, live chat, and email passes, among other features. Gunbot's choices can be very overwhelming. Each concern will be addressed.
"The Social Trading Platform for Cryptocurrency."
Shrimpy is a rebalancing service for cryptocurrency trading bots. This is also one of the characteristics that distinguish it from other bitcoin trading bot systems. It enables you to simplify portfolio management and rebalance it to a predefined ratio.
It is a fund management bot that is optimized for indexing, rebalancing, and strategic backtesting.
The best thing is that you will rebalance your portfolio when hoarding coins. It integrates with over ten cryptocurrency exchanges.
- Automated Trading: Connect Shrimpy to all of your cryptocurrency exchange accounts to simplify trading techniques that will help you achieve higher efficiency and lower risk over time.
- Trade Mirror: Copy the top cryptocurrency traders automatically on the only social trading website designed specifically for portfolio management.
- Portfolio Management: Regardless of your level of familiarity with cryptocurrencies, Shrimpy will assist you in developing a portfolio plan, tracking results, and monitoring the sector.
- Security: Shrimpy needs only the ability to read data and execute transactions, ensuring that the funds remain on the market. Additionally, they allow all customers to take advantage of our Two-Factor Authentication ("2FA") program, which secures account entry.
"Code trading bots like a professional."
Trality's unique selling point is its in-browser Code Editor, which enables even the most complex and innovative techniques to be written in Python using a variety of unique order types. This is not a challenge if you are neither an experienced trader nor a Python developer. Trality also offers another product, dubbed the 'Rule Builder,' that enables you to create your bot without any programming knowledge.
- Python and Trade: To trade profitably, you need all available help and support. At Trality, they equip you with the resources necessary for trading success right from bot creation to trade execution.
- Backtesting: With in-browser backtesting, you can optimize your algorithms.
- Cloud-based live-trading: Rely on their infrastructure, which is spread through several regions and is situated close to your preferred cryptocurrency exchange.
- Security: Trality never has direct access to your funds; instead, bots transmit trading signals to your preferred exchange.
"All-in-one trading platform for your Bitcoins and other Cryptocurrency."
According to the company, the platform's network of linked exchanges is a crucial benefit since it allows account holders to quickly identify arbitrage opportunities. "The arbitrage website displays a list of possible arbitrage opportunities in an easy-to-read format, including the buying price, sale price, and potential net profit after completing a transaction."
According to Bitsgap, users can take advantage of these price differentials as long as they have accounts linked to those exchanges through API and trading balances accessible.
The majority of Bitsgap's tools are automatable, and the application is accessible across desktop and mobile devices. Bitsgap has a trial mode that enables newcomers to learn about trading without losing their own money, while more seasoned consumers can test advanced trading strategies.
From a security standpoint, users can opt for two-factor authentication (2FA) and email validation of unknown system logins. Users determine API key permissions, and Bitsgap needs only access to the trading history, balance display, and trading permissions, ensuring that user funds remain in their exchange account at all times.
- Trading bot: Gain an edge over the fluctuating market with minimal risk by profiting from each market shift produced by our automated algorithms.
- Signals: Our algorithms automatically identify the coins with the greatest potential by analyzing over 10,000 crypto pairs per second.
- Arbitrage: Benefit from a price differential Purchasing cryptocurrency on a lower-priced platform and then trading it on a higher-priced exchange.
- Track and Monitor Bitcoin and 1800+ cryptocurrencies: Bitsgap automatically imports and records all data from your crypto exchanges into a single, easy-to-use dashboard – it's completely free.
You've chosen a bot, configured its tactics, and monitored its efficiency. Now, how do you report these transactions to the IRS? Simply put, cryptocurrency bots transact on your behalf on exchanges. Therefore, when it is time to file your income, you just need to import your transactions from these markets through cryptocurrency tax apps. It's the same procedure you'd use with self-made trades.