Cryptocurrency Trading Bots
Trading bots consist of software that automates trading by relying on a variety of indicators to recognize trends. Trading software using advanced algorithms has been in use for several decades by hedge funds, but bots aimed at private investors are a relatively new innovation. The first ones were aimed at foreign currency (Forex) traders, but the rise in popularity of cryptocurrency trading has resulted in several bots now being able to trade crypto assets.
Top Cryptocurrency Trading Bots
As cryptocurrencies have become more widespread, the number of tools offered to investors has grown as well. This explains why there are now dozens of cryptocurrency trading bots you can choose from. Some are open-source software that anyone can download and use for free, while others are aimed at professional crypto day traders and come with expensive subscription packages. When choosing a trading bot, you should know that even the best ones will vary in terms of quality and how profitable their use is.
Here is an overview of some of the most popular cryptocurrency trading bots you’ll find today:
Gecko is a Bitcoin trading bot that is free and open-source. The software is available on Github for anyone to download. It lets users execute a variety of trading strategies by pooling together live price data and calculating indicators. It has the ability to execute live orders, as well as simulate markets by relying on historical price data. This allows you to test trading strategies based on past market conditions.
Even though it’s somewhat lacking in terms of functionality when compared to its rivals, Gecko is still a good trading bot, as it has enough features to let those new to cryptocurrency day trading try out a variety of strategies.
More than a simple trading bot, CryptoTrader is a cloud-based platform that gives users a place to develop their own trading bots, which are then hosted on the service. CryptoTrader works with a variety of different exchanges and cryptocurrencies. It includes robust trading strategy testing features, in addition to a marketplace where users can buy and sell their own trading strategies.
CryptoTrader is available as a monthly subscription. Prices range from 0.0013 BTC to 0.016 BTCper month.
Gunbot is a crypto trading bot that both beginners and more advanced day traders can take advantage of. It supports a wide variety of settings that give users a lot of control over how trades are carried out. Gunbot supports nearly all of the major cryptocurrency exchanges, including Poloniex, CEX.io, Bittrex and Kraken. Unlike most other bots that are offered as a monthly subscription, it’s sold as a lifetime license. The prices varies depending on the version chosen, with the basic “Lite” edition being offered for 0.02 BTC, while the “Gunbot RT Ultimate Edition,” which includes all of the features, currently sells for 0.15 BTC.
Cryptohopper is a cloud-based bot, which allows it to keep working without requiring that you keep the program running on your PC. It includes interesting features for both new and experienced traders. Beginners can take advantage of external signals, allowing them to set the bot to execute trades based on the recommendations of trusted third parties, while more experienced traders can configure the bot manually based on several technical indicators that can be fully tweaked.
Cryptohopper offers a free month of trading for you to try out the service. If you want to keep using it, the subscription packages range from $19 to $99 per month.
Using Trading Bots Comes With Various Risks
Trading cryptocurrencies in itself is quite risky, as they’re part of an immature and relatively illiquid market. Using trading bots can mean an even greater amount of risk compared to trading manually. Here are the top risks associated with trading bots:
As mentioned previously, trading bots can vary greatly in terms of quality. If you use software that is poorly coded or faulty, you could end up losing money. This is why you need to do some research to choose the Bitcoin trading bot with the most solid reputation. Take a look at reviews, both from professionals and independent users, before using a particular bot. However, you should know that even the best software can have hidden flaws that haven’t been discovered yet.
The world of cryptocurrency trading is largely unregulated, making the markets prone to events that could result in serious losses to investors. Flash crashes can occur even with the most popular cryptocurrencies. A famous one affected Ethereum in June 2017. If you haven’t set the proper stop-loss limits in your trading bot, a flash crash can lead to huge losses in a matter of just seconds.
Scams around trading bots ASIC mining, Bitcoin lightning network and other cryoptocurrency miner hosting providers have been a major issue in the Forex space for many years. Unscrupulous vendors would make claims that you could make huge returns with little to no risk by using their software, which often turned out to perform very poorly once allowed to make real trades.
Now that many day traders are turning their attention to cryptocurrencies, one shouldn’t be surprised that many scams targeting crypto traders have appeared. A recent example involves a Bitcoin trading platform by the name of Hexabot. Their website promised users profits of up to 24 percent per week. Unfortunately, the cloud-based trading bot started running into problems soon after it was launched. At first, withdrawals were stopped. Then, the service has shut down and their website disappeared in what looks like an “exit scam,” which happens when the owners of a platform run away with funds belonging to their customers.
Automated Bots Still Need Monitoring and Adjustments
While bots can automate your trading and reduce the amount of manual operations you have to carry out, they’re not a “set and forget” solution that lets you earn passive income once deployed. The cryptocurrency market continues to grow and evolve daily. Trading strategies that could have been profitable a few weeks ago could be completely useless by now. When you use a trading bots, you’ll need to set its parameters so that it can function properly in current market conditions. Finding new profitable trading strategies involves doing a fair amount of testing and research.
Remember, using cryptocurrency trading bots is often riskier than trading manually. You should only use the software with limited amounts of capital that you can afford to lose should something go wrong.