Evan SelemaniThe cryptocurrency market is characterized by high volatility. It results significant price fluctuations within minutes or seconds. It can be difficult for humans to react quickly enough to price changes to make ideal transactions.
The fear of miss an opportunity ou to be greeted by an unpleasant or pleasant surprise opening your wallet is a familiar feeling for investors. Indeed, regular monitoring is necessary to identify the best opportunities, and the slowness of some exchanges exacerbates the problem.
One solution to these problems is the use of automated tools or bots that facilitate the execution of transactions or carry out transactions on behalf of investors. However, everything is not black and white; the use of a trading bot has advantages and disadvantages. What are the best bots for trading cryptocurrencies? What return can you expect? How to avoid scams? This post will address all of these concerns.
Definition of a trading robot
A trading robot is software that interacts directly with various trading platforms, executing buy and sell orders based on the interpretation of market data. The majority of robots use APIs to collect and interpret information, and they integrate positional sizing rules for determine the quantity to buy or sell.
Many robots analyze market data such as volume, orders, prices and a variety of other factors. Additionally, the user has the option to configure the robot according to their preferences.
What are the best Cryptocurrency trading robots?
Trading robots have been present in financial markets for many years. Previously, this type of tool was only accessible to the elite, because you had to pay a significant amount of money to obtain them. This is no longer the case, trading robots are now accessible to the general public. Some trading bots like Bistgap are available for less than €19 per month.
Some bots allow users to trade using advanced tools across a variety of platforms, while others don't innovate at all. Which of these bots should you choose? We have chosen for you two most established cryptocurrency trading bots in the field of automated trading.
Bitsgap: The best bot for beginners?
Bitsgap is one of the most popular cryptocurrency trading platforms. It allows users to use bots to automated trading, to follow and copy the trades of experienced traders.
The objective of this platform is to make trading easier for new, intermediate and experienced investors. Additionally, investors have the ability to customize their own automated trading strategies.
3commas is a complete cryptocurrency platform who proposes more than 30 indicators and several models. Additionally, it supports the most popular exchange platforms such as Binance, Bitmex, Bittrex, bybit, Coinbase Pro, Huobi, and Okex.
- >>> You can read our article Bitsgap Reviews.
The advantages of Bitsgap
- Price from 19 euros per month. It is one of the cheapest on the market.
- An easy to configure bot
- An integrated system that works with multiple platforms
- Maximizes automated trading potential
- Educational resources
- Detailed analyses.
The disadvantages of Bitsgap
- A platform that may be too “simple” for experienced people
Cryptohopper: Best bot for trading cryptocurrencies?
Firstly, the fact that CryptoHopper being classified as a trading robot may give rise to uncertainty as to its operation. However, it is simply a web-based solution that provides a user-friendly interface with a wide range of execution functions trading positions.
Indeed, Cryptohopper is a trading platform designed to help users simplify the trading process while maximizing gains and reducing risk of loss. It stands out from its competitors by offering a comprehensive and easy-to-use service, and enables the trading of a large number of cryptocurrencies while eliminating human vulnerabilities related to emotions.
Users of this platform have the possibility to copy experienced traders, set up signals and alerts, And much more. Actually, Cryptohopp is does not guarantee profits, but provides investors with tools that allow them to trade cryptocurrencies using algorithmic trading approaches and external signals.
The advantages of Cryptohopper?
- Free trial of the platform
- A wide range of assets
- Copy experienced traders
- Intuitive Interface
- A low monthly cost ($19 for simple functions).
- Sophisticated tools
- Support the most popular platforms
- Automated trading without paying fees.
Disadvantages of Cryptohopper
- Payment for additional functions.
Are cryptocurrency trading bots profitable?
Dreams of quick money seduce many investors and can lead to massive losses. During the uptrend, everyone feels like a trading geek. However, during a bear market, market reality sets in, even large companies fall. Keep in mind that it is not possible to eliminate all risks associated with automated trading.
Interest in cryptos is growing day by day. Is it possible to generate profit with robots? These allow constant interaction with the market, remove emotion in trading and copy other traders. However, the answer to the question of whether trading robots are profitable is not one-sided. Regarding investment, nothing is ever sure.
Indeed, the trading robot collects the necessary data that influences the decision to buy or sell. However, it is not always rosy, given that the cryptocurrency market reacts strongly to various facts (for example, the tweet of'Elon Musk, regulations, the general economic context, and many other factors). In fact, some facts cannot be programmed into the bot for effective analysis.
Should you use a bot to trade cryptocurrencies?
Are trading robots useful for trading cryptocurrencies? The debate is divided into two parts. While some argue that it is enough to choose a reputable bot and configure it correctly to make profits, many others argue that losses occur at one point or another.
Certainly, a trading robot is useful in filling human gaps and allow investors to search for opportunities of income 24 hours a day, 24 days a week. However, remember that with every opportunity to make money comes the risk of losing it. Regardless of the tool used, it is essential to prepare emotionally for both losses and gains.
After a monthly subscription, investors can learn more about using a trading robot using the trading simulator. It involves using real-time market data without investing real money. This allows you to understand how your bot works before moving on to more serious things. However, the real experience begins when it comes to real money, which involves the psychological side.
With automated trading, you are less exposed to your sensitivity and emotions. These are the algorithms that trade for you.
How to choose your cryptocurrency trading bot?
Cryptocurrencies are considered by many to be one of the most profitable instruments. This notoriety attracts a large number of investors, as well as a large number of scammers who create tools to steal the funds of the less seasoned. On the one hand, cryptocurrency trading bots were invented to facilitate trading, but there are also countless trading bots designed only to scam.
Indeed, some trading robots contain spyware that collects data, while others employ a technique known as Wash Trading. This is a less scrupulous method that involves, for example, providing erroneous data to users, such as the practice of artificially increase trading volume of certain cryptocurrencies. This has a considerable influence on the decision of the buyer or seller.
By choosing a dubious robot, you expose yourself to excessive risks, thus increasing the probability of making mistakes et worsen your financial situation. How to avoid all these pitfalls? The answer is simple: choose a reputable platform, such as those listed above.
Techniques to avoid cryptocurrency trading bot scams
Certain factors must be taken into account in order to eliminate the risk of purchasing a fraudulent cryptocurrency trading robot. It is not even necessary to create an account on certain sites to avoid exposing your contact details. We were able to identify the following characteristics shared by the majority of fraudulent trading robots:
- A less intuitive interface: The majority of scammers do not hire professional developers to provide quality service because they understand that it is only for a limited time. By visiting the scammer's site, for example, it is very likely to find some typographical errors.
- A tempting promise: to easily deceive their customers, scammers do not hesitate to promise the impossible. The most important thing for them is to attract as many customers as possible and leave with the cash register.
Types of trading bot strategies?
Nothing magical, just like humans rely on various indicators to decide whether to buy or sell, trading robots do the same, but with the added benefit of removing human emotion, which frequently causes traders to lose a lot of money. Here are the many strategies used in algorithmic trading:
- The arbitrage strategy
- The momentum trading strategy
- The Mean Reversion strategy
- The Machine Learning strategy
👉 Arbitrage strategy
When cryptocurrency trading was in its infancy, arbitrage was one of the main strategies traders employed to generate profits, due to the huge difference in liquidity between platforms.
Arbitrage is the practice of buying assets on one exchange and selling them on another at a higher price in order to profit from the price difference and vice versa. Today, due to services offered by cryptocurrencies (putting aside the media circus), disparities are reduced. However, even today when prices rise or fall suddenly, the price difference becomes significant.
—> Read to find out more our article onCrypto Arbitrage.
👉 The “Momentum trading” strategy
This is a strategy that allows you to follow market trends in order to take advantage of a clearly identified trend without taking too many risks. Thus, the trading robot is responsible for analyzing market trends based on numerous parameters.
The objective is to maximize profits by buying at a low price and then selling after reaching a certain percentage. You can also sell high and buy low. This allows to avoid panic attacks caused by various emotions.
By tracking the profit percentage specified by the user, the robot maximize profits and multiplies winning trades by capitalizing on a clear trend. However, a 100% sure strategy does not exist in the world of trading. If this strategy seems attractive, this is not always the case for highly volatile assets which do not respect supports or resistances.
👉 The “Mean Reversion” strategy
The moving average is one of the most closely watched indicators in trading. The different trading robots are based on the fact that, in the majority of cases, prices end up return to the average of the asset price. This is the case of strategy “Mean Reversion”.
One of the important indicators on which the Mean Reversion is "the Bollinger Bands”. These define upper and lower limits which govern the average price of an asset. Once these limits are reached, there is a good chance that the price will return to the moving average. Therefore, bots programmed to follow this indicator anticipate the different variations to come.
The “Mean Reversion” strategy is also based on the different correlations between assets. Everyone knows that when the price of bitcoin rises or falls, the entire market follows suit. Bots can thus directly buy or sell other assets that keep pace with bitcoin.
👉 Strategies based on Machine Learning
Advances in artificial intelligence affect almost every sector. It is already possible to develop machine learning algorithms to implement an effective trading strategy. The trading bot based on this strategy takes care of the data processing and the analysis of human decisions. This involves scanning millions of pieces of information (news articles, tweets, transaction volume, etc.) in order to anticipate trends in the prices of cryptocurrencies or other assets.
In addition, it is possible adjust the trading strategy setting autonomously, based on continuous data collection. This almost eliminates human intervention. However, since the past does not predict the future, it is no longer strategic to consider this solution a miracle.
Conclusion on automated cryptocurrency trading
The craze around cryptocurrencies has been accompanied by the popularity of cryptocurrency trading bots. These tools allow investors to interact with multiple markets and eliminate some human emotion in certain transactions. To be clear, the goal of a bot is not to make its users rich quickly ; rather, it is an instrument that allows traders to spend less time and effort on their investments.
Although there are some free robots, many serious robots offer monthly user fees. Indeed, each robot understands its requirements in terms of use. We brought you two of the best cryptocurrency trading robots which favor low-risk trading strategies. Yes, understand that like manual trading, automated trading also remains a risky practice.
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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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Hello, it would be cool to have a tutorial on other crypto trading robot platforms like robotscrypto.fr does for example.
Thank you!
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