AUtoMATED TRADER

A trading bot is a piece of software that is designed to analyze cryptocurrency markets and to place buy and sell orders on the trader’s behalf. It is an automated crypto trading strategy that involves technical analysis and utilizes algorithmic trading rules to execute trades at an ideal moment in order to generate profit for the user.

Trading bots act based on preprogrammed and algorithmic trading rules. Their decision making is hinged on the price fluctuations in the market, they analyze market conditions such as price, volume, time, and orders.  Trading bots are fine-tuned by their users to meet their own trading preferences. Left to their own devices even the best crypto bot can create losses for their users so despite automated bots doing the work for you, they need to be monitored and maintained.

The ease of use of the trading bot is certainly something that will be appreciated by both novice and advanced traders. After all, the whole point of using a crypto trading bot is to make your trading easier. Try and find a bot with an intuitive interface and simple control settings.

The whole point of using a bot is to automate trading to generate a profit, so this is another important factor. The trading bot is programmed to generate the best profits for users in various market conditions. 

There are a few reasons you might want to use a trading bot rather than executing trades yourself, the one caveat to using a bot being that you will still have to monitor what it is doing to an extent. Here are a few reasons you might want to use a trading bot:

Trading bots can analyze market conditions in multiple cryptocurrencies, simultaneously, and execute trades whenever there is room for making a profit. Whereas humans can only analyze cryptocurrencies and market conditions by going through them one by one. You can miss out on many profitable trades because you are looking at another crypto asset. Bots can do it all and more efficiently.

They can also conduct repetitive tasks such as periodic rebalances for you at a much faster rate. Not only that but they can execute trades instantaneously making their trades more effective than if you were to be sitting there executing trades manually.

With the price fluctuations commonly seen in cryptocurrency markets, human emotion can affect trade decisions negatively. But with an automated bot, it is pre-programmed and thus unaffected by emotion. Therefore, it will still follow its rules regardless of wild market changes.

The crypto markets never stop, neither does trading. However, you cannot always stay in front of your computer executing trades. By having a bot running you can take advantage of trade opportunities 24/7 instead of just when you have time. This increased ability to take opportunity results in higher profitability.

There are a few different trading strategies you can use your bot for, and many bots come programmed with one of these strategies in mind. We will take a quick look at a few of them:

This strategy is built on the assumption that if a price on a coin deviates from its average, it is destined to revert back to its average. Essentially this is a buy low, sell high strategy. If the price drops down below a market average, the bot will begin buying, if it goes up high, it will begin selling.

For this strategy, the investor holds short-term positions and sells at the peak of the wave before it crashes. This strategy is based on the belief that prices will continue to rise above expected averages and inevitably fall. This means that entry timing (when a trader buys into a market) and exit timing (when a trader sells out of a market) is vital. A bot can analyze data and determine when to sell a position before everyone else tries to do the same.

Arbitrage strategy makes a profit by buying and selling on exchanges simultaneously to make a profit on the spread. Unlike momentum trading, this strategy is independent of market performance and is fairly low risk. It simply requires speedy buys and sells in order to exploit price differences before they close up. This is where the bot comes into play as it can make these trades simultaneously. The best crypto arbitrage bots will be able to execute trades with lightning-fast speed.