You probably know that traditional stock exchanges are populated with algorithms that almost eliminate the human share of participation in the markets. Because the situation with crypto is not the same and institutions only start investing, you can use automation to your benefit in these markets, to compete with traders who still manually place orders.
Why automated crypto trading?
Crypto trading bot, or crypto trading robot, is a software program that follows a predetermined set of instructions in accordance with a specific trading strategy. In plain English, crypto bot buys and sells coins on your behalf on top of a crypto exchange. You’re probably thinking that that doesn’t sound very much different to manual trading. And yet, automated trading is very different to manual trading in a few significant ways:
Bots don’t have emotions
Every professional trader knows how important it is to keep emotions under control, so the crypto bots set to follow parameters of the trade behave around market fluctuations with amazing calmness. Compared to anxious human traders who sometimes cannot stand market fluctuations and do reckless trades, bots simply follow the trading strategy no matter what.
As you know, crypto markets operate 24/7, which means that you have more opportunities to earn on trades - and less, too, since there is a bigger chance of missing out if the trend starts while you’re sleeping.This is where crypto bots come in handy, too. Instead of sleeping 8 hours a day, they run around the clock to monitor markets while you’re busy doing something else.
Increased trading speed
If you think that quick clicking is one of the features you need to practice in order to get ahead of other traders - you’re right, but only if you’re a human. Crypto bots are much quicker than humans and they can place a significant amount of orders in a matter of a short time period compared to you.
That being said, of course, there are many advantages of using bots, but also you should always keep in mind that there are such risks as scam bots. Also, never leave your bots ungroomed for a long time; quite the contrary, monitor them often to adjust to a current market situation. And last but not least, learn how to trade, your bot is not the answer to your get-rich prayer. It’s just a tool that encapsulates your experience.
Types of crypto bots
Now that you want to give a try to automation, let’s see what kind of crypto bots there are out there.Crypto trading bot can be cloud-based, this is when you use the company’s server, or it can be downloadable, which means you might want to install it to your computer. Also, there are free bots or paid, depending on the platform you use. For example, with TradeSanta, you can run up to two bots endlessly if your trading volume is less than $3K, but the primary difference lies in strategies.
DCA bot places the first buy order and, then, extra orders if the price goes into the opposite direction. It places the take-profit order for all buy orders executed.
Grid bot places the first buy order and, then, extra orders if the price goes into the opposite direction. It places the take-profit order for all buy orders separately.
Trend trading bot analyzes trends and places buy and sell orders based on specific market conditions, for example, when a bullish trend starts.
Arbitrage bot tracks if there is a difference between coin’s price on two markets and executes the trade.
Coin lending bot helps you lend crypto to margin traders and earn interest on this process. Every time the lending period comes to an end, this bot automatically renews it.
Market making bot catches the spread between the buy and the sell price trying to take advantage of the price differences.
To sum up
Hopefully, now you know what crypto bot is and what advantages over human traders it gives you. Want to try automation yourself? If the answer is yes, be sure to check out our TradeSanta trading platform!