What are Cryptocurrency Trading Bots and Why We Need Them

Beginner’s Guide / 23.06.2019

Investors in the crypto space regularly find themselves in a difficult position when implementing specific investment strategies. In particular, Newbies have a hard time understanding cryptocurrencies and how to leverage them for profit maximization.

It is indisputable that digital currencies tend to be volatile, making it a risky venture. Without a solid investment plan, investors can easily experience financial losses.

However, mitigating these risks is more comfortable with the power of crypto trading bots. In essence, trading bots are software that applies artificial intelligence to execute trades. 

The trading software acts like an emotionless program since they perform trades purely based on the market’s status and momentum. Without a doubt, trading bots will eventually change the crypto space and the overall financial industry as we move closer to a technological era. 

How the Software Programs Work

Trading bots typically merge with an exchange platform such as Binance or Bitfinex through an application programming interface. APIs create a direct link between exchanges and an outside party by providing real-time market data or live pricing feeds necessary for effective trading.

Therefore, traders need to produce their API keys and submit them to the trading bots. This move assures the exchanges that the trading software has access to the exchange’s data on behalf of the trader. Within no time, the bot starts trading automatically after setting it up and allowing full access to a trader’s exchange account.

The Significance of Trading Bots

Automated trading may vary as bots focus on smart order routing, monitoring and adjusting portfolios, data collection, among others. In terms of performance, trading bots work way faster than human beings, and here’s why they are vital innovations.

A Remedy for Complex Trades

Cryptocurrency trading remains a challenging task even for experienced investors. Strategies fail to work in most cases, no matter the amount of skill a trader poses. Furthermore, humans are prone to making small errors that could impact their earning potential. 

Implementing a trading bot will come in handy for you since the software has slimmer chances of failing. In the end, all complex trades will be catered for as it completes the most challenging tasks manually impossible to handle.

Continuous Trading

The cryptocurrency market is a reliable and active arena that doesn’t close at any moment. It functions non-stop, all day and night, as market participants continue to swarm the trading grounds. 

Therefore, bots equally remain active and operational to initiate and execute trades when the investor is not around. A point to remember is that trading tactics do not have to remain the same because they can be adjusted from time to time and run endlessly.

Handle Repetitive Tasks

Doing the same kind of work every day can be exhausting to some extent. For instance, constantly rebalancing your crypto portfolio can make you lose interest at one point because of doing one activity over and over again. On the other hand, Trading bots don’t mind undertaking any repetitive trading activity because they are programmed.

Bots are Accurate

Once a bot is in place, the chances of receiving precise and successful results are higher. As mentioned earlier, human beings are more susceptible to committing an error. Leaving all your strategies to the software is a convenient way to achieve more accurate results when trading.

Examples of Trading Bots

Cryptohopper

Cryptohopper runs as a world-class trading bot focused on reducing the risk of financial losses while trading with cryptocurrencies. It brings you an easy-to-use interface hosting social and algorithmic trading functions.

Moreover, Cryptohopper introduces some special trading tools such as trailing stops, bot backsetting features, technical indicators, and many more. It features some of the largest exchanges in the market today, including Coinbase Pro, Kraken, Bitfinex, and Binance

At Cryptohopper, new traders do not need to worry about which strategy to employ as the ecosystem allows them to utilize other experienced traders’ trading tactics. To begin your automated trading journey, Cryptohopper offers different packages at a small monthly fee ranging from $19 to $99. 

3Commas

At 3Commas, traders have the opportunity of designing their trading strategies or follow in the footsteps of other successful traders. It is a cloud-based system extending cryptocurrency management services and access to an array of tools.

3Commas is compatible with any device, and it contains a modern API merged to exchanges like KuCoin and Bitstamp. The ecosystem was established in 2017, and as of now, it hosts approximately 220,000 registered users. Pricing plans at 3Commas start from $20 to $69, although a free-trial alternative is also available. 

HaasOnline

HaasOnline is a computer-based trading bot aiming at bringing traders advanced and automated trading technologies. The platform is a true pioneer of cryptocurrencies as it only accepts payments through bitcoin. Therefore, annual charges/service fees range from 0.013 to 0.039 BTCs.

As the ecosystem executes trades round the clock, users, more so experienced ones, can design their trading bots through a programmable script. It contains different trading bots like flash crash bots and trade bots customized to meet various functionalities. 

As a security measure, HaasOnline merges with safeties, including stop-loss options to safeguard the innocent trader’s funds. 

Conclusion

Trading bots might be the best solution to most traders out there with a negative narrative towards cryptocurrencies. Through this software, trading has been made easier for any investor hoping to profit from digital currencies.

However, like any other technological advancement, trading bots can receive threats such as bugs that may compromise the user’s funds. On the flipside, bots can go a long way for your investments and enlighten your digital currency venture. All in all, cryptocurrency trading bots work more effectively and accurately on trades than manual executions.

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.