How trading bots for cryptocurrencies work and what are the best ones
Trading bots is a tool for automated trading that allows crypto traders to count on higher profits. The special software automatically buys and sells assets according to the set parameters that the user has entered in its settings.
What is a crypto-trading bot
Using bots trading allows you to avoid the emotional impact on trading. It is ideal for those traders who succumb to momentary impulses, which often causes them to suffer losses. With the help of the bot trades will be made only according to the specified parameters.
Trading does not stop for a second, so using online trading bot allows you to trade without stopping for sleep, rest or food. The crypto trading bot helps you monitor the situation and buy or sell your assets in the right situations if necessary.
How the bot for crypto trading works
The principle of bot trading is quite simple. To make transactions, the user enters the price of the asset at which it should be bought and sold. Most bots also allow setting up so-called trailing orders. This allows the user to profitably discount an asset if its price is falling, but in the long term, it is expected to grow.
The operating principle of the bot can be divided into 3 stages:
- The stage of price forecasting. The bot analyzes changes in the market, and understands whether it is reasonable to buy or sell assets now.
- Risk analysis stage. Based on the data obtained earlier, the bot sets the risk for operations with a particular asset.
- Execution stage. According to the specified algorithm, the bot sells or buys the cryptocurrency.
Are bots for crypto-trading profitable?
Many traders are interested in how effective automatic trading (trading with bots) is. It is necessary to understand that the trading bot performs transactions according to a given strategy. Its advantage is to automate the process and to remove the emotional component from trading. If the algorithm is properly configured in this way, you can count on a stable passive income.
However, bots are not suitable for impatient people. If you enter an unsuitable algorithm or change it frequently, your deposit will rapidly decrease.
Therefore, it is important to use a stop-loss to minimize risks, and to trade only with money you can afford to lose.
The best crypto trading bots
There are a large number of trading bot platforms on the market right now. However, it is possible to single out certain bots that are distinguished by their wide functionality and reliability. Such platforms for automatic trading should include:
- 3commas. The bot supports 13 crypto exchanges. Thus, you can simultaneously trade on several platforms. 3commas supports the stop loss function, which guarantees the safety of your deposit during the fall in asset prices. Many users consider 3commas the best bot for crypto trading.
- Cryptohopper. An excellent bot for trading on Bitvavo. But it also supports several other exchanges: Binance, Kraken, etc. Cryptohopper resembles 3commas in functionality, but its free version is more limited.
- Bitsgap. The minimalistic and user-friendly interface of this bot contributes to the efficiency of trading. Lots of indicators and analytics
Market trading bot is a useful tool, which in the right hands can lead to a stable passive income. But you should use the bot with caution.