The growth in the value of cryptocurrencies in 2017 attracted many new players to this market, seeking to get rich quick. Some of them managed to earn, but most parts suffered losses. A cryptocurrency trading bot is a tool that, when systematically used, will help reduce risks and achieve a stable result.
A bot for the exchange or a cryptocurrency trading bot is a particular computer program that performs repetitive actions for the purchase (sale) of currency pairs according to the algorithm established by the developers. Robots for cryptocurrency exchanges are written to save the trader from continually being at the trading terminal and performing mechanical, routine work in cryptocurrency trading. Such programs can work around the clock even in the absence of a person.
Robots are great for high-speed trade. Modern automated trading programs are capable of executing thousands of transactions in a millisecond. Such software is indispensable for high-frequency trading, arbitrage operations on several exchanges, market-making and other strategies that require high-speed application submission.
The task of the trader is to find a pattern in the price movement of an exchange instrument. Often the most straightforward ideas work. A trading bot is tested based on past price behavior to determine the profitability of the strategy. Debugging the algorithm allows you to determine the optimal trading parameters using technical indicators without violating privacy policy.
The crypto trading bot includes a mechanical trading system, recorded in the form of program code. Arbitrage operations, the bot simultaneously makes the purchase and sale of cryptocurrency on different exchanges. There are several kinds of bots.
They seek to catch a significant movement in the market, trading in the direction of the primary trend. Most often, various technical indicators are used for this purpose. Basic peculiarities:
This type of bot is one of the most suitable ones for novice traders.
They trade against the primary trend, based on the signals of technical indicators, support (resistance) levels, and candlestick patterns. Most often, oscillators are used here, talking about the overbought (oversold) market. Such bitcoin trading bots are well suited for trading strategies in the range.
Arbitration bots are a special kind of cryptocurrency trading bots, the purpose of which is to make a profit on the difference in the rates of cryptocurrencies on different exchanges. The program for algorithmic trading monitors all available crypto trading platforms in search of inefficiency.
Many novice traders believe that having acquired good trading bots, they will consistently make money under any conditions, but everything is much more complicated. The market is a dynamic environment, the terms on which are always changing. Therefore, no algorithm can regularly generate profit from month to month, even if it showed good results in the past.
To make stable money with bitcoin trading bot, you need to spend a lot of time and effort studying the market and searching for new trading ideas. Automation in the right hands makes this task a lot easier. As a basis for your research, you can buy or download ready-made crypto trading bots for free, but you need to understand the strategy based on which the trading algorithm is built.
Using a bitcoin trading robot has significant advantages over manual trading on crypto exchanges:
However, bots for high-frequency trading have some drawbacks. Automated trading requires money, and it is always connected with some technical risks. Thus, most experienced users still prefer “manual” trading to automated ones.