The Ultimate Crypto Bot Trading Guide

What Is A Crypt Trading Bot?

Trading bots are software applications that utilize Application Programming Interfaces holding a user's exchange account to execute trades and transactions automatically if the market conditions are favorable and meet a particular set of criteria.

Crypto trading bots combine traditional market fluctuations and signals such as orders, volume, and time, with technical analysis signals, including Bollinger Bands, moving averages, and Ichimoku Cloud. In addition, recent developments have led to the inclusion of other factors, like social media sentiment.

Various innovative platforms cater to the differing needs of crypto traders. Some platforms offer functionalities designed for experienced traders specifically, providing tools for creating complex automated trading strategies that are backtested against historical cryptocurrency market data.

Other platforms aim to provide less experienced crypto traders the opportunity to optimize their returns without complications making trading decisions encompasses. Such platforms typically offer social trading, copy trading, and automated trading based on algorithms.

With the increasing hype surrounding yield farming and DeFi, crypto holders can use automatic trading strategies to generate profit without sacrificing time. Of course, each crypto trading bot option carries its own risk factors. Nevertheless, this automatic solution serves both active traders and passive investors alike.

How Do Crypto Trading Bots Work

Crypto trading bots present a new means of trading where errors are sufficiently minimized, and speed is advanced substantially. These bots communicate directly with crypto exchanges and automatically place orders based on the user's conditions and desired outcomes.

Trading on an exchange requires users to authorize a trading bot to access their account using API keys. Account access can be withdrawn and granted at any time.

Three Key Stages Of Crypto Trading Bot Functionality:

(1) The Signal Generator

This generator effectively executes the duties of the trader. It makes predictions and identifies potential trades depending on the signals indicated by market data and technical analysis.

(2) Risk Allocation

As the name implies, this stage involves the distributions of risk factors according to a particular set of rules and parameters determined by the trader. The bot acts accordingly by calculating how and to what extent your capital is allocated.

(3) Execution

In the execution stage, cryptocurrencies are bought and sold based on the signals provided by the pre-configured trading system. These signals are converted into Application Programming Interface keys requests, which are understood and processed by the crypto exchange.

Advantaged Of Crypto Bot Trading

Many traders question the need for trading bots. To explain the benefits that can be reaped from automatic trading, one merely needs to look at Wall Street. Approximately 80% of stock market trading is done via algorithmic-based automated trading programs. With trading bots, you do not need to be an esteemed financial expert or Python coder to trade wisely and efficiently. Platforms like Trality are making major strides in leveling the playing field and presenting retail traders, whether they are beginners or experienced, with the opportunity to generate worthwhile returns.

Higher Trading Speed

There is no denying that bots can do the same job much faster. Crypto trading bots have the ability to execute thousands of transactions and millions of computations almost immediately. Bots ensure that trades are finalized within a fraction of a second where no individual trader could ever achieve this rate.

Emotionless Trading

Emotions inevitably get involved because of the stress and pressure associated with trading something as volatile as cryptocurrencies. Where emotions are part of the equation, errors in judgment are made. It has been proven that the trader's emotional state greatly influences 39% of manual trades. This leads to irrational thought patterns and decisions. Crypto trading bots offer an alternative, systematic approach to trading, sure to exalt the trading decisions made.

Backtesting And Paper Trading

Humans undoubtedly learn best by doing, and market simulators are valuable learning tools that help traders do just that. In crypto trading, nobody wants to lose money as part of a learning curve. Even experienced traders can benefit greatly from the use of trading simulators.

Trading bots offer a solution by allowing traders to harness historical data's power to simulate the feasibility of a particular pricing model or trading strategy. The ultimate goal of trading simulators is to determine how well a trading strategy will likely perform, as indicated by historical data. With a reliable and adequate backtesting tool, traders don't need to sacrifice their money to explore and identify the best strategy.

Consistent Trading Discipline

To become a successful and knowledgeable trader, a vast amount of discipline is required. Crypto trading bots ensure consistent discipline despite volatile and fear-inducing markets where a trader may have acted impulsively. The pre-established trading rules see to the optimization of long-term performance in the absence of biased human intervention.

Important Types Of Trading Bots

Market Making

Market making is excellent in avoiding large swings in price, often by setting sell and buy limits near the current market price. Many market-making bot traders join forces with their trading projects.

Arbitrage Bot

An arbitrage trading strategy encompasses the simultaneous buying of coins on a certain exchange and selling the coins on another exchange. This strategy adds immense support in making safe and fast profits.

Mean Reversion

This AI crypto trading bot involves designing a strategy based on the conjecture that you can revert back to a coin's average price if the price currently differs from its average. A trading bot will recognize assets prices that dropped below their average, buy them in large quantities, and await the reversion of their value.

Momentum Trading

This is a trend-following strategy ideal for exploiting the positive momentum of your assets and selling them as soon as that momentum reverses. The fundamental premise behind this belief is that the value of your coins will rise above their average price before running out of momentum and falling down. When this happens, buying and selling at the right time is crucial.

Copy Trading: 

Copy trading, as the name implies, is a trading trend where bots automatically imitate the trading activities of other traders. This strategy frequently involved a social community and a leaderboard.

Top Ten Crypto Trading Bots In 2022

(1) PIONEX

Pionex is one of the first exchanges to offer twelve free crypto trading bots. Users can utilize these bots to automate trading every hour of the day without constantly evaluating the market. This platform accumulates the liquidity from Huobi Global and Binance, making it one of the largest Binance brokers available today.

Features Include:

• The leveraged Grid Bot offers up to 5x leverage.
• Pionex offers twelve free bot options for the convenience of retail investors.
• The Grid Trading Bots allow users the opportunity to buy low and sell high within a particular price range.
• Compared to other major exchanges, Pionex offers a low trading fee, which is 0.05% for both maker and taker.
• Retail investors can make passive income with the help of Spot-Futures Arbitrage bots. The estimated return ranges from 15 to 50% APR, and the risk is lowered substantially.
• Smart Trade terminal enabled traders to take profit, set up stop-loss, and trail, all in one trade.

Exchanges include Pionex, Huobi Global, and Binance.

(2) CRYPTOHOPPER

Cryptohopper allows traders to trade for Litecoin, Ethereum, and BTC. As one of the best trading bots on the market, Cryptohopper helps traders manage all their crypto exchange accounts in one place.

Features Include:

• This bot enables users to create their own technical analysis.
• Security protocols are implemented on Cryptohopper to protect your accounts.
• Strategies and bot templates are easily accessible.
• The interface is known to be very user-friendly.
• Cryptohopper's algorithms support BB, RSI, and EMA, among other common indicators.
• This tool offers real-time performance reports.

Exchanges include Bitpanda Pro, Huobi, Krake, Okex, HitBTC, and Binance.

(3) TRALITY

Trality is a great option for traders who wish to maintain a day job while profiting from algorithmic crypto trading. Its state-of-the tools create intricate and creative algorithms designed to promote development in traders.

Features Includes:

• The app offers a drag-and-drop graphical interface that is very helpful for beginners.
• Extremely fast backtesting.
• Pre-defined strategies
• Python code editor built into the browser.
• Live trading runs every hour of the day and night, causing you never to miss a trade.

Exchanges include Kraken, Binance, Coinbase Pro, and Bitpanda.

(4) COINRULE

Coinrule offers over 130 trading strategy templates that allow users to trade automatically for various exchanges.

Features Include:

• You can test the performance of rules on past data.
• Real-time customer service is always available.
• A market indicator helps to distribute funds easily.
• You can set custom trading rules.
• Trading continues all hours of the day and night.
• Its encryption is military-grade.

Exchanges include Coinbase Pro, Binance, Bitstamp, HitBTC, Okex, Kraken, Bittrex, and Poloniex, among others.

(5) BITSGAP

Bitsgap is an excellent trading bot, analyzing over 10 000 crypto pairs to detect coins with the shortest potential. This application offers users the ability to manage their crypto assets effortlessly. Your bot strategy can be established within seconds.

Features Include:

• It's a fully automated bot, working 24/7.
• A chart clearly illustrates your trading.
• You can test settings before putting your funds at stake.
• Your funds are kept on the exchange balance to keep them safe.
• It allows you to gain maximum profit.
• You can access this application without downloading it.

Exchanges include Bitfinex, Bittrex, Exmo, OKEX, Binance, Kraken, Bithump, Coinex, Livecoin, and Bibox, among others.

(6) CRYPTOHERO

This application is powered by AI and is free to run. CryptoHero is perfect for beginners to set up easily and automate their trades without any coding skills being required.

Features Include:

• The interface is user-friendly.
• You can connect your APIs effortlessly because of multiple exchange support.
• The technical indicators have presets.
• Popular bots have discovery features, making them readily available for setup.
• You can track your crypto trading performance individually or collectively across multiple exchanges.
• A quick backtest with past data is done before deploying.
• Technical support and real-time service are available 24/7.
• Paper Trade is risk-free.
• This application is available on Android, iOS, and Web.

Exchanges include Bittrex, Binance, Pro, Kraken, Gate.IO, and Coinbase Pro.

(7) SHRIMPY

Shrimpy is a social trading platform designed for crypto. Users can improve their performance and limit risks with the application's trading strategies.

Features Include:

• The application simplifies your managing your portfolio.
• You can view the live market price.
• This app has a dashboard that includes statistics about the performance metrics of a portfolio and each asset.
• The API key is encrypted and stored by Federal Information Processing Standards 140-2.

Exchanges include Kraken, Binance US, KuCoin, Bitfinex, HitBTC, OKEx, and Bitmart, among others.

(8) QUADENCY

This application is a digital asset management app. Quadency provides automated trading solutions for both retail traders and institutional traders. Quadency eases the process of crypto investments.

Features Include:

• The app provides good customer support.
• You can easily customize bots.
• The app offers multiple trading bots to choose from and customize.
• Quadency supports automated trading.
• It provides advanced TradingView charting and automated tools.

Exchanges include Krake, Binance, Bittrex, AAX, Birfinex, Coinbase Pro, and Gemini, among others.

(9) STOIC

Stoic implements AI to provide automated cryptocurrency investment software that aids in diversifying your portfolio and identifies worthwhile investments across the vast crypto market. As one of the best crypto trading bots available, Stoic considers all assets on Binance and has at least $10 million in trading volume.

Features Include:

• It helps you take profits and buy in the dips by allowing you to set up which portion of your portfolio to keep in USDT.
• Its algorithm enables you to analyze price volatility, previous returns, and correlation with other assets.
• Stoic aims to perform better than its competitors by rebalancing your portfolio daily.
• The app's algorithm determines the probability of the asset crashing.

Exchanges include Binance.

(10) ZIGNALY

Zignaly has an integrated crypto market monitoring service called Hamster as well as cryptocurrency quality signals, making trading easy. This app is a trading terminal, accessible 24 hours of the day.

Features Include:

• The app allows you to check your results based on their positions.
• Any installation is compatible with Zignaly.
• You can split your profit targets.
• This app stores your coins safely on the exchange.

Exchanges include VC Exchange, FTX, KuCoin, and Binance.

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