Trading bots have been around for a while but due to the rising popularity of cryptocurrencies, they have become extremely popular over the last year. You may have heard of crypto trading bots but if you aren't sure what they are, this guide will help you understand trading bots and how they can help you make more money with your cryptocurrencies.
Best Crypto Trading Bots
Trading bots have been in the market for a long time now. They have been used by investors to make money over the years with the rising popularity of trading securities. You may have heard about people using bots to trade in cryptocurrencies but if you're not quite sure what they are or how they can be useful for your crypto investments, then keep reading and we will share some of our knowledge about trading bots with you here!
What is a crypto trading bot?
A cryptocurrency trading bot is a software that connects to a cryptocurrency exchange. It uses a pre-determined set of rules to decide whether to buy or sell a particular cryptocurrency at a particular time. These rules are based on things like volatility, price, historical data, and other factors.
Why do you need a crypto bot?
Cryptocurrencies are notorious for their extreme volatility, with values fluctuating drastically inside minutes. Additionally, investors may participate in cryptocurrency trading from anywhere in the world and at any time of day. When these considerations are combined, they significantly reduce the efficacy of human cryptocurrency trading.
How a crypto trading bot can help you?
To begin, investors cannot often respond rapidly enough to market shifts in order to execute the best trades potentially open to them. Exchange delays and settlement times complicate this dilemma even. Second, investors obviously cannot devote the resources required to the cryptocurrency markets in order to always make the right trades. Which will necessitate round-the-clock surveillance of cryptocurrency exchanges located around the world. Altrady, for example, assists you in monitoring and managing your crypto portfolio by including a variety of crypto trading software tailored to help you manage the muddy waters.
Fortunately for many investors, these problems have remedies. Bots, or electronic tools that perform trades and execute transactions on behalf of human investors, are one of the key solutions. Without a doubt, bots are a contentious aspect of the industry, and there are arguments for and against their use.
Crypto bots benefits
- Trade multiple markets at the same time
- You can trade crypto coins 24/7.
- Auto-detects market trends and makes quick informed decisions
- Sell and buy bitcoin with ease. No need to worry about the volatility of the market
- Traders can also add their custom trading strategies with the help of a trading bot.
- You can use the bots on any PC or mobile device.
- You can use bots to trade while you are at work or on vacation.
Top Cryptocurrency Bots
While the Altrady cryptocurrency trading platform is a newcomer to the automated trading game, the application's enhanced capabilities indicate a bright future for the trading group. In Q4 of 2021, Altrady will launch a Signal Bot, and in Q1 of 2022 grid bots & DCA.
Altrady teased a smart trading terminal and now consumers can anticipate the following features:
Trading on Several Exchanges
Altrady currently supports twelve cryptocurrency exchanges, including Binance, Bittrex, BitMEX, KuCoin, Kraken, Coinbase Pro, HitBTC, Huobi, OKEx, Poloniex, and Binance US. This function enables you to transact on any of these markets without encountering normal difficulties or complications.
After connecting your Altrady account to either of the exchanges through API, you may automatically begin trading. Utilize Altrady's website or desktop browser to buy and sell coins on various exchanges. Manage your trades and keep an eye on your places from everywhere with a single mobile app.
Additionally, Altrady's multi-exchange trading terminal has a tab that allows you to browse various charts for your favorite stocks. Select as many markets as you want to build your own layout to display business activity on a single screen.
Automatic Portfolio Tracking & Trading Analytics
Altrady's automated fund manager allows you to keep track of the flow of your Bitcoins and altcoins across exchange wallets. This provides you with a concise analysis of your overall assets and a thorough breakdown of their allocation by currency and crypto exchange. With automated asset monitoring, you can quickly make the best trading decisions and change your trading strategy when required.
Altrady also has an automated break-even calculator. This method allows you to instantly determine if you are indeed profiting from your trades on a given market.
Additionally, you can use Altrady's trading analytics to determine the average value of your trades throughout your buy and sell history. This tool aggregates all of the data required to assess your trades and direct your future activities.
Take Profit Order & Trailing Stop Order
Advanced orders are a modern order class added to Altrady's existing order forms. Take benefit and trailing stop orders allow you to engage in the most lucrative market opportunities even while you are sleeping or away from your trading screens.
Take benefit orders are standing orders in which a price point above the purchase price is stated. This is to boost your gains by selling your coins immediately upon a price rise. Profit orders help you mitigate the uncertainties associated with rapidly evolving economies by helping you to profit when a successful price change occurs.
Additionally, trailing stop instructions are advantageous for optimizing gains and minimizing expenses. When used correctly, it will have an advantage by allowing you to keep your trades open and benefit from favorable market conditions. Additionally, it protects against damages by automatically terminating trading as the coin market moves in the opposite direction of a predefined trigger price.
Altrady's roadmap indicates that additional automatic trading capabilities will be launched in the future. Altrady will release bots and a marketplace in the third quarter of 2021 to fully automate the process of buying and selling coins. If this is accomplished, traders will no longer be required to choose a marketplace or establish an initial buy order. They will begin trading immediately by using bots and marketplaces within the Altrady cryptocurrency app.
The Binance API is a programming interface that enables you to connect to the Binance servers using Python or a variety of other languages. You will use it to simplify your trading. More precisely, Binance uses a RESTful API to send and receive data via HTTP requests. Additionally, a WebSocket is available for streaming data such as price quotes and account alerts.
Binance has consolidated its role as the industry leader in the cryptocurrency trade. Commissions are very competitive, and you can have a difficult time finding a more affordable trade.
Additionally, Binance has a strong track record of security. Binance has only been hacked a few times, which is something that all exchanges are vulnerable to given the nature of the market.
Although protection is a significant advantage for Binance in terms of exchanges, there are better options depending on the needs.
Subsequently, API architects always prepare carefully and it is not a safe idea to make API changes because they typically affect a large number of users and communicating changes is not always simple.
Additionally, there are outages. Binance has recently taken its API offline approximately once a month for a few hours per time to perform scheduled upgrades. This necessitates manual action and enhanced status control on the part of algo traders.
How to get a Binance API key
After signing into your Binance account, click on the profile icon in the upper right-hand corner. Pick API Management from the drop-down menu.
Following that, you'll be prompted to build a mark for the API key. If you want to generate several keys, it's a smart idea to give each one a descriptive name to facilitate later identification.
If you have allowed two-factor authentication, you will be prompted to authenticate once again.
Binance will give you an email confirming the creation of the API key. To continue, click on the confirmation page in your confirmation email.
At this stage, your API key should be created. Please keep in mind that this is the only way your API password will be disclosed. You will not be able to use this page again if you navigate away from it.
Protect your API credentials like you would any login, as someone will gain access to your account if they obtain this information.
We strongly advise you to store your API keys in environment variables. Thus, whether you post the code to GitHub or email it to others, you avoid disclosing your credentials.
Quadency, headquartered in New York City and employing team members worldwide, is on a journey to simplify the process of selling and investing in digital assets for all.
Quadency is a trading platform that seamlessly links to all major cryptocurrency exchanges, allowing you to trade from a single location. Quadency can be linked to exchange accounts using API keys.
Additionally, assets stored in common offline, cold storage, and online wallets can be tracked automatically, allowing you to keep track of your whole portfolio while trading.
In a nutshell, bots allow you to automate a trading strategy. A policy can be as straightforward as purchasing a small volume of an asset over time, or as complicated as grid trading and portfolio rebalancing.
Both plans have a range of pre-configured bots to assist you in automating a multitude of techniques.
Quadency is integrated with all major global exchanges and has collaborated directly with Binance, AAX (LSEG Tech), KuCoin, OKEx, and Liquid to enhance the trading experience.
Quadency currently facilitates real-time portfolio management for the most common wallets, ranging from Metamask to Trezor.
The Lite package includes the majority of the platform's functionality for free, although some premium features include an upgrade.
There are no extra processing costs, and the exchange will not bill you for exchanging Quadency.
Quadency uses a variety of authentication mechanisms to guard against unwanted access to the accounts, including protection of API keys, passwords, and other personal material.
Users are urged to use two-factor authentication and to uninstall withdrawal permissions from exchange APIs. They are also encouraged to store non-traded funds away from exchanges and in stable, hardware wallets.
3Commas is a third-party cryptocurrency trading bot service that allows you to bind your API keys and trade using a grid strategy. One of the best aspects of 3Commas is that it allows for idle trading for those who want to try the grid bot before investing real money. 3Commas still serves the majority of the major exchanges but has a monthly fee.
3Commas offers a variety of technical methods for automated cryptocurrency trading. GRID Bots and DCA Bots are the two primary bot forms available.
The GRID bot's objective is to assemble a grid of orders within a defined range, hence the term "GRID."
GRID bot enables you to reap instantly and with minimal effort. Simply choose a coin and an initial deposit, and the bot can purchase when the price falls and sell when the price increases.
GRID Bot is an incredible tool for both seasoned and inexperienced traders.
The GRID bot's behavior in the "AI Strategy" mode:
1. The bot analyzes the market fluctuations of your chosen token over the last seven days and creates trading channels and extremes.
2. GRID splits the bot's investment into the left and right sides of the selected pair and creates a limit buy and sell order grid within the channel. When the price crosses a buy or sell line, it will execute the exchange instantly on your behalf.
Manual mode allows you to individually change the price scale, the number of grids, and their spacing. If you have the necessary skills, it enables you to develop your trading strategy.
A DCA technique (or "Dollar Cost Averaging") is the method of trading in a currency at predetermined intervals in order to reduce the entry price of a position over time and to minimize uncertainty danger.
For instance, when you reach a position with a lump-sum purchase (all-in), you risk buying "highs" only to see the price fall, leaving you with a losing position that you must decide whether to keep or cut at a loss.
However, by using DCA, you can split your investment into smaller bits and purchase the asset at various points in time at various rates, resulting in a greater overall price for your share and significantly reducing your exposure to volatility's effects.
Consider the following example:
You have $5,000 and plan to spend it in five months at a rate of $1,000 every 30 days.
If the values at the time of each entry were $100, $90, $80, $70, and $95, the total asset price will be $85.50.
If you had invested the whole amount at the start, you would have paid $100 per share (nearly 20% more!).
According to Beijing-based founder Chen Yong, BitUniverse, a company backed by China's Shunwei Capital and ZhenFund, has a monthly trading volume of about $5 billion on its online brokerage website. And over 80% of its 100,000-plus daily users use a grid trading algorithm, which automates buy and sell orders at predetermined frequent intervals in order to profit from normal market fluctuations, Chen said.
The recent cryptocurrency boom has resulted in the establishment of major exchange operators such as Binance and Huobi — but brokerage services, which are critical in conventional financial markets, are largely absent from the scene.
BitUniverse is one of a recent generation of companies aiming to become a one-stop-shop for everyday users to buy cryptocurrencies such as Bitcoin and Ether by connecting them to liquidity across a variety of exchanges. Its algorithms allow customers to position orders 24 hours a day, seven days a week – a feature that some exchanges provide but brokerages do not.
"Trading bots allow users to transcend their human shortcomings and develop into logical investors," Chen explained in a video interview. This does not guarantee they will benefit, he says, but they will "at the very least risk less."
The intensely competitive cryptocurrency market offers the majority of buyers the idea of a high-risk, high-reward gamble. It's natural for a coin to spike up to 20% and then right by 20% the next day. As a result, a large number of people are using arbitrage bots to capture these unpredictable assets. Along with the spot market, many exchanges sell permanent futures contracts that enable traders to hedge their positions up to 125x, further increasing the volatility of the cryptocurrency market.
There are some dangers associated with manually doing spot-futures arbitrage that you should be aware of in advance.
1. You are unable to reduce your position in the spot market when your futures position is being auto-deleveraged.
2. The market spikes and you are forced to liquidate your short position due to your inability to close your futures position in time.
Investors should sign up for free bot systems that will assist them with their cryptocurrency trading. On the other hand, many bots charge a user fee, which can be very high in some cases. Typically, investors identify the bot or bots that would be most beneficial to them and then obtain the code from the creator. Each bot has unique software and hardware specifications.
Bots may be extremely beneficial, but the controversy about whether they should be allowed in cryptocurrency trading continues. To optimize the effectiveness of a bot, however, an investor must understand how to use the tool effectively. For example, investors must establish the appropriate accounts on several digital currency exchanges.
They must maintain cryptocurrency balances in those accounts. They are sometimes used to make financial decisions such as whether to purchase or sell. What a cryptocurrency bot is not is a get-rich-quick scheme for investors unable to spend the time and effort required for performance.
Concerning the drawbacks of cryptocurrency bots—for one, several bots offer just minimal returns (even when operating correctly). Second, a large number of bots are actually poorly built.
Thirdly, and perhaps most critically, active bot use includes a thorough understanding of the digital currency markets and an excellent supporting investment strategy. For certain investors, a bot may be an extremely beneficial method for assisting them in their cryptocurrency trading. For some, though, by the time they've prepared themselves properly to use a bot, they might find that they no longer need its services.