Trading in cryptocurrencies is surely a hectic task with their level of volatility. You can still manage it if that’s what you are into as a professional. But the need for constant vigilance can be quite a hassle for people having a separate day job. Automation comes as the most sought after solution for this problem.
Beginning of it
The concept of bots was first introduced in 1949. They got traction later as they proved their usefulness with the time. Over the years, they have evolved with changing market needs. There are usually two uses that bots find in crypto trading:
- These are used by traders and investors for day to day tasks to assist them in making better investments.
- Another use they generally find is making trading decisions, and earn profit for their subscribers.
Features of a Crypto Trading Bot
- Back-testing: Before handing your money over to a machine, it is always smart to test it on historical data of the market. Performance of the bot on the past data can be a good measure of how it would perform in the future. It is always prudent to keep your test as close to the real environment as possible to prevent overfitting.
- Strategy: Bot is nothing but a machine that you need to provide a strategy with. Such strategies are provided by the trading experts. Such logic is preprogrammed into the bot to make decisions. Back-testing is done only after you have decided upon a strategy and fed it to the bot. It is good to use crypto signals to help bot follow the strategy but it works best only with good information. You need to subscribe
- In action: Next logical step is to put your bot into action. In this step, your code is changed into a form your exchange can understand.
- Job Scheduler: Job scheduler helps in scheduling your trading activities, thus fully automating your services.
Note: Some of the best crypto signals providers also make use of these bots to analyse price movements.
Popular automation services/ bots
- MyCryptoParadise: MyCryptoParadise is not a robot but a full package of crypto trading services which even supports automation. Their API auto trading extra package takes care of a lot of load off your hands. It supports all the popular exchanges.
- Bitsgap: This is an automated bot which works 24/7 hours, which can be accessed online. It supports back testing which is an essential step before moving on to the real thing. It can analyze thousands of crypto pairs, thus helping you manage your crypto assets with ease. It supports all the popular exchanges out there.
- Mudrex: One of the best crypto trading bot which has a very intuitive interface which makes it easier even for the beginners to trade. It supports exchanges like Coinbase Pro, Binance, etc.
When should one use trading bots?
Trading bots don’t do all machines which can do anything and everything for you. You still need to manage your basics like trading strategies that you need your bot to follow. But here a few cases, when bots prove helpful:
- Repetitive tasks: The most boring tasks are undoubtedly the ones which tire us the Such tasks are often outsourced all over the world to machines as it increases the efficiency of the human capital.
- Speed: Markets require fast execution speed and humans can’t possibly compete with machines when it comes to speed.
- When you have a different job: Trading in itself is a job and it becomes hard to compete with fellow traders if you aren’t vigilant all around the clock.
- Bots can help with difficult tasks like mind crunching calculations using past data which become hard for a human mind to bear for a longer duration of time.