Crypto bots are Tried and Tested in forex, stock, and other kinds of digital asset trading. Research shows that only 38% of crypto users agree that they use trading bots. However, this number increases to 86% when the amount of money moved is considered. Additionally, it’s found that most crypto trading bot users are institutional traders.
Crypto trading bots are created to bring higher revenues and reduce the risk of losses for traders. In this article, we will help traders understand how these bots help trade successfully and efficiently. The article covers in-depth detail about the working of crypto trading bots, their benefits, pros and cons, and other essential aspects.
A List of Crypto Trading Bots
Traders can access Pionex without paying any registration fee. The bot employs crypto-to-crypto conversions to fulfill predefined market conditions and support manual trading. It is a rebalancing bot that automatically adjusts users’ portfolio positions using their preferred token combination. Its Smart Trade Terminal uses comprehensive technical and fundamental market data to help users set up, earn a profit, and prevent loss.
- Free access to 16 native trading bots.
- A grid trading bot to help users buy at a low price, and sell in a higher price range.
- Options of one-time sell and DCA buy to capture fluctuation in profit.
- Repeated purchases at frequent intervals to offset the volatility’s effects.
It is a cloud-based trading software that functions 24/7. It can connect traders with popular crypto exchanges like Huobi, Binance, etc. The bot allows traders to use short and long strategies, and take insights from multiple indicators. The software enables DCA or grid bots and allows traders to place trading orders through the Smart Order feature.
- Custom parameters and indicators to process bot programming.
- Simple and clean dashboard.
- Extra order tool to buy additional coins if previous trade decisions face loss.
- Strong tech indicators like Bollinger signals and Moving Average Convergence Divergence (MACD)
The platform allows traders to copy trading insights, crypto trades, and trading sentiments of trustable traders that use the bot. Users can directly visit other users’ information, like profits and portfolios, through their feeds. This bot mainly serves institutional and retail traders.
- Access to 20+ cryptocurrencies
- Ready-made smart portfolios
- Available Fractional shares
The bot has a user-friendly interface, which can be used by both beginners and experienced crypto traders. Traders can assess the viability of their existing trading strategy, and find out how it would work using historical data. The bot lists template strategies, including long-term holding and stop-loss settings that trigger actions with the changes in the cryptocurrency market. New templates are added regularly.
- Embeds indicators like Relative Strength Index, Bollinger Bands, and MACD.
- Community support via live telegram chats, emails, and webinars.
- Trading templates are available on the pro version.
- Interface compatible with iOS and Android apps.
The bot uses cloud storage to host trading services. The setup process of the bot is intuitive and simple, making it a good option for beginners. It integrates the social sentiments of the trader with other investors to refine trading strategies. CryptoHopper runs Dollar Cost Averaging (DCA) bots to get an average buying price across digital assets’ distinctive price ranges. Traders can also copy the trading strategy of experienced traders to make profits with minimal effort.
- Customizable tech indicators.
- Trading tools, including trailing stops and backtesting.
- Strategy templates can be configured and saved
Top 5 Crypto Trading Bots Comparison Chart
|Crypto Trading Bot||Platform Access||Customer Support||Exchange Support|
|Pionex||Mobile and web||Web contact page support||7|
|TradeSanta||Mobile and web||Live Chat, Telegram Group||8|
|eToro||Mobile and web||Email support, Call support, Live chat page||6+|
|CoinRule||Web only||Email, Webinar and phone call support||10+|
|CryptoHopper||Mobile and web||Help center page, Email, Request page, Telegram, Discord groups||16|
Introduction to Crypto Trading Bots
Cryptocurrency trading bots are automated software equipped with smart trading capabilities. They take out the human error from crypto trading. These bots are built to make trading easier and more convenient for both novice and experienced traders by offering a user-friendly interface to traders.
Traders don’t have to brainstorm to find the best trades across multiple exchanges as these bots can quickly do it for them. Crypto bots remain active round-the-clock to detect profitable trades based on users’ preferred parameters, thus making the entire trading process smooth. People can choose from different types of trading bots as per their preference. Some of the main types are:
Simple or traditional trading bots: These are the earliest type of crypto trading bots, which require traders to download and install the trading bot service on a compatible device. These bots can work offline, and users always have access to their data. Bots are customizable and responsive.
Advanced crypto trading bots: These bots are well-trained to entirely manage a trader’s cryptocurrency portfolio. They detect profitable investments across the market round the clock and proceed with trades automatically while accounting for risks. If the advanced trading bots are not cloud-based, traders must keep their computers or servers running all the time to get timely market updates.
Cloud-based crypto trading bots: Cloud-based bots provide a faster and easier way to manage trading portfolios via pocket devices. Traders don’t need to download and install the software or app on their devices. Instead, they can back up their data on the cloud solution. They can access trading bots remotely using the internet. These bots allow traders to store unlimited data and increase the storage capacity of the services. Most modern trading bots are cloud-based.
How Do They Work?
Crypto trading bots use algorithms that automate trades when they find the right market conditions. These algorithms enable bots to seek markets for suitable trade setups constantly. Once found, bots run scripts to specify the position size, conduct the trade, apply stop-losses, and automatically exit.
- Data analysis: These bots use technologies like Machine Learning, AI, etc., to identify, collect, and analyze extensive market data quickly and smartly. The bot uses signal generation to identify and predict the best possible trade options after completing data analysis. The main elements used for making the prediction include technical analysis, indicators, and market data.
- Risk allocation: The crypto bot employs certain rules and parameters set by the user to distribute risks. It decides how and to what extent investment can be distributed across the exchanges for trading.
- Execution: The bot uses a pre-configured trading system to execute the trades. The system generates signals that tell bots to sell and buy certain cryptocurrencies. The bots convert these signals to API key requests to help exchanges understand and process them. Traders can use this API key and a secret key (provided by the Exchange platform on signing up) to connect the bot with the exchange.
The feature enables traders to participate in crypto markets by employing a program that conducts preset rules to enter and exit trades. It uses thorough technical analysis to set the preset rules for trader’s positions, such as trailing stops, orders to open, and guaranteed stops. Auto-trading benefits users by reducing trading time, and taking emotions out of trading decisions by strictly following set parameters for trades.
The feature enables traders to simulate a crypto trading strategy with the help of historical data. It generates results and assesses profitability and risk before investing capital for a particular trade. It makes it easier for traders to know whether their trading strategy is fundamentally sound and can yield profits if implemented.
Crypto trading bots can take instructions from traders and work accordingly when choosing the ideal trades. The machine learning technology adjusts the parameters preferred by traders to align with their investment goals in the best way possible. The feature benefits crypto bot users by getting them the best trade options across multiple chains.
Crypto trading bots work as automated software helping traders buy and sell crypto coins at the correct time. It uses different types of indicators or signals to ensure trade entries when the market is most profitable. It then automatically exits the market without missing out on additional profits.
Multi-Exchange Support & Partnerships
These bots let traders deploy automated cryptocurrency bot strategies across different exchanges, without needing to change their network. Traders can access all their trades in a single convenient interface.
Some bots feature advanced solutions like portfolio analytics. It monitors and tracks all the crypto assets of users effectively. Portfolio Analytics allow users to view:
- Asset allocations
- Profit and Loss Statement
- Historical and Real-time performance breakdown
Pros and Cons
- Crypto trading bots significantly reduce the risk involved with the cryptocurrency trading market by calculating ROI and possible risk in a specific asset.
- They improve the efficiency and profitability of traders by analyzing and executing best trades 24/7.
- They quickly respond to market fluctuations. Thus, they increase traders’ efficiency.
- Crypto trading bots make more objective decisions as they don't base their trading decisions on emotions such as greed and fear.
- Traders often complain about the lack of flexibility while using crypto trading bots as they provide access to very few cryptocurrencies, and work with limited digital exchanges.
- Sometimes, these bots make unexpected decisions on behalf of traders taking control of trades.
- Trading with automated software comes comparatively at a higher price than manual trading.
- Bots overly depend on historical data, which sometimes does not align with current market conditions resulting in incorrect trading estimations.
Legit crypto trading bots ensure robust safety measures to protect users’ privacy and transaction data. Here are some of the key security measures bots use:
- Bots do not store traders’ digital assets on their platforms. Instead, they use a unique API to link with exchanges and send trades to execute on the exchanges where assets are stored.
- Two-factor authentication (2FA) is provided through embedded Hardware Security Keys/FIDO2 to safeguard users’ money and accounts.
- They store traders’ information on a secure network that uses 2048-bit standard protocol encryption and firewall protection.
- Bots provide the option of complex password support.
While bots have their security measures, we do recommend traders take the following steps to ensure their bots and accounts remain secure:
- Use reliable password management tools, and never share account passwords with anyone.
- Level up account security by enabling Google Two-Factor Authentication.
- Set up strong and unique passwords.
- Do not download attachments or click on links from suspicious email addresses.
- Subscribe and update good antivirus software on the devices installed with crypto trading bot apps.
- Use a VPN service while using public Wi-fi, or any unsecured network.
- Stay alert about phishing emails that urge bot traders to take quick action, or their accounts will be blocked.
- Never call or send money to anyone claiming to be a respective crypto trading bot’s support service member unless confirmed precisely.
What are the Benefits of Using Crypto Trading Bots?
What are the Risks Associated with Using Crypto Trading Bots?
How do I Set up and Use a Crypto Trading Bot?
Here’s a step-by-step guide on how to set up and use crypto trading bots:
Traders must define their investment goals such as which assets they want to allocate money to. Once the goals are defined, traders must look for trading bots that can seamlessly trade their chosen assets.
Traders must provide the required credentials to sign up for an account on their chosen trading bot.
Traders must sign in to the exchange platform(s) that they want to trade using crypto bot, and generate API and Secret keys. Next, the trader must log in to the trading bot’s account, and provide the keys wherever asked. This connects the trader’s trading bot to the exchange platform.
The trader needs to go to the settings, and select the strategy template(s) that configures how their trades will be carried out. A trader can customize the templates as per their existing trading strategy.
We recommend traders to start with small trades, and check how their configured strategy performs in the market. Traders can readjust the strategy template if it doesn’t meet their trading goals. Additionally, ensure to update trading strategy based on the market conditions regularly.
To withdraw funds, traders must search for the coin’s name that they want to withdraw on the bot’s dashboard. They must provide the address they want to transfer the coin, add the withdrawal amount, and submit the request. Traders will be asked to provide their password, verification code, and Two Factor Authentication code to proceed and transfer.
Technical Analysis and Strategies
Crypto trading bots use technical analysis to make predictions by analyzing market data, and trends. They process large amounts of historical data, including price and volume information, to identify patterns and trends in the market.
The bots then use this information to make predictions about future market movements and generate trading signals accordingly. Technical indicators, such as moving averages and relative strength index (RSI) are applied to the market data to help the bot determine the direction and strength of the trend, as well as potential points of support and resistance.
The bot can then execute trades based on these signals, such as buying or selling a particular cryptocurrency at a specific price point. The goal of using a trading bot is to automate the process of decision-making and trade execution to maximize profits and minimize risk.
Below are a few important trading strategies that legit crypto trading bots use:
The strategy uses increased trading volumes to book a profitable trade. The bots consider the margin requirement and all additional rules to prevent bad trading experiences. The strategy analyzes cryptocurrency assets, trading volumes, and past trends and selects entry and exit points within 24 hours.
The strategy works around market volatility to capitalize through it. The bots perform effective momentum trading by using risk management techniques like stop loss to reduce the occurrences of loss. Bots ensure that buying and selling are correctly timed to avoid big losses.
Mean reversion trading
When the bot is set to use a mean reversion strategy, it tries to use a particular security’s extreme pricing changes to capitalize on it. The strategy’s logic is that the price changes will revert to their previous state. It can be applied to the selling and buying process, enabling traders to save on abnormal loss and profit on sudden price upswings.
Arbitrage crypto strategy
The strategy involves purchasing a coin on one exchange and selling it on another. The traders make small profits by using the price difference between the two platforms.
It involves using borrowed funds to pay for a trade. The trading strategy enables traders to open a position without needing to make the full payment from their account.
How to Customize and Optimize Strategies for the Best Results
Crypto trading bots enable traders to adjust variables used for technical trade analysis. Traders need to find the relevant parameters or variables and figure out the best settings for those parameters/variables to optimize their strategies. The trading bots can be easily programmed to analyze the ideal optimization for a particular strategy by focusing on adjusting the variables like:
- Entry and exit rules
- Position sizing
- Risk management
Integration with Trading Platforms
Connecting trading bots with trading platforms and tools is beneficial for traders primarily in the following two ways:
- The bots examine asset prices across different exchanges and perform trades to gain advantages from price discrepancies.
- They make it easier for traders to close more trades by eliminating manual and time-consuming work.
Here’s how to integrate your chosen bot with different exchanges and tools:
Generate API and Secret Keys
- Log in to the preferred exchange platform.
- Search API Management in the dashboard menu options.
- Give a name to the crypto trading bot and tap on Create.
- The exchange will trigger two-factor authentication and send an email confirming whether the user wants to create a new bot.
- Click on the link to be redirected to the API Management Page.
- The page will provide API and Secret keys.
Note: Don’t enable the bot with withdrawal rights to secure your funds on the exchange.
Integrate the Bot with the Platform
- Log in to your trading bot account and choose the exchange(s) from the sidebar menu.
- Once selected, copy and paste the API, and Secret keys generated on the respective boxes.
- Tap on Connect to integrate the bot with the selected exchange platform. It will give the bot access to the user’s exchange account.
Finalize Trading Rules
Set parameters or rules for how the bot should carry out trades. Users can either use the predefined rules template by the bot or create and customize their own rules by following the steps below.
- Tap on the Create Rule option.
- On the Rule page, tap on the Templates.
- Select a suitable template from the list (review the template description before choosing).
- Customize the template by choosing the preferred coins (Ex. Bitcoin, Dogecoin) and their tradable amounts.
- Name your created Rule.
- Pick the number of times you want the Rule to execute.
- Tap on Launch (A summary of the Rule may pop up).
- Once satisfied with the summary, tap on Launch Live.
Costs and Pricing
Pricing models differ based on the crypto trading bots, depending on their offered subscription plans. Here is the breakdown of prices associated with the top 5 crypto trading bots:
|Crypto Trading Bot||Price|
|Pionex||Maker and taker rates are fixed at 0.05% of user’s total trade value|
|TradeSanta||Starter $0 / month - Basic $13 / month - Advanced $23 / month - Maximum $35 / month|
|eToro||1% fee charged for buying or selling crypto assets $10 inactivity fee/mo|
|CoinRule||Starter: Free - Hobbyist: $39.99/month ($359/year) - Trader: $79.99/month ($719 /year) - Pro: $449.99/month ($5,399/year)|
|CryptoHopper||Pioneer: Free - Explorer: $16.58/month - Adventurer: $41.58/month - Hero: $83.25/month|
To summarize, crypto trading bots can be a great aid for traders as they allow strategy testing and optimization. They are customizable and do not hold users’ money in the platform. But, the bots can also lead to unexpected trades that may put traders in losses if they don’t pay attention on time.
Thus, it’s important to keep a check on this automated trading software. Traders can pick an ideal bot from the top choices like Pionex, CryptoHogger, TradeSanta, etc based on features and pricing models. Integrating crypto bots with exchanges is simple and easy but ensure to keep your API and Secret keys hidden.
If you have a good knowledge of the crypto trading market and strategies, you can optimize the trading bot in the best possible way resulting in maximum investment benefits. People who have wider portfolios should leverage these bots to keep all profitable trades under their radar. However, if you are a beginner you can try out a reliable trading bot to understand market trends and learn from experts through mirror investments.
But, do not completely rely on the trading bots, instead, use them to gain trading experience. We advise traders to get familiar with the crypto trading terminologies and common strategies before deploying automated trading bots to trade on their behalf. Thus, traders will be able to monitor its moves in an informed manner.
Here are some key points to consider while picking the best crypto trading bot:
- Free trial: Sign up for the free trial plan to try the services of the bot before making the purchase.
- Social Trading: Check whether the bot offers social trading options where you can follow other experienced traders.
- Backtesting: A profitable trading bot must offer a backtesting feature. It enables you to test your existing trading strategies quickly.
- Indices: A good trading tool should provide information on the process of indices creation such as how the coin sampling happens, how market cap is weighted in the index, etc.
- Trading Communities: Check the interaction among trading communities of the trading tool through Reddit, Telegram, or Discord. See how frequently they are active.
- Crypto Tax Software Integrations: Your chosen crypto trading bot should be compatible with crypto tax software companies. A reliable crypto tax software supports trading strategies and makes reporting tax easy.
- Use a trailing stop-loss feature to follow the strategies that’ll keep winning trades open while also preventing maximum loss.
- Add a cooling-off period function to prevent any further trades after recent stop-losses.
- Apply a trend indicator on the longer time frame to keep track of long-term trend direction.
- Scale positions with the help of Value at Risk (VaR) so the risk gets proportional to the market volatility.
Yes, cryptocurrency trading bots are highly customizable. You can create or apply your existing strategies, test them, and refine the strategies by making adjustments in the relevant trading variables. Thus, you can even design high-end trading strategies depending on the bot service
Take the following options to secure your assets and crypto trading bot:
- Delete your API keys once you stop using the trading bot.
- Never allow the bot to withdraw currency from your account.
- Apply Two-Factor or Multi-Factor authentication features.
- Prefer TOTP passwords while logging in to your account as they are valid only for 30 sec.
Follow the below steps to connect your bot with trading platforms
- Get your API key and secret key from the exchange(s) you want to connect your trading bot with.
- Sign up to your trading bot account and select exchange(s) from the list, and provide the generated keys.
- Select the parameters and set desired trading rules on the bot.
- Provide a name to the rule, and define the number of times you want to apply the rule.
- Tap on the Launch option to enable auto-trading.
A legit crypto trading bot consists of the following features:
- A trustable bot won’t promise a specific amount of returns.
- The bot company should have a human engineering team for technical support.
- It should offer transaction records.
- Referral rewards should not offer an oddly huge amount.
Some of the best crypto trading boys are Pionex, CryptoHopper, TradeSanta, eToro, CoinRule, BitsGap, and HaasOnline.