Automated trading is prevalent in today's financial world, and the cryptocurrency market is no exception. Automated trading enables traders and investors to build and run systematic trading strategies that can augment their manual trading activities. This article will provide a brief overview of automated trading, discuss how it can benefit cryptocurrency investors, and detail some of the more popular services currently delivering these opportunities.
What is automated crypto trading?
Automated crypto trading platforms are computer software programs that allow users to deploy predefined strategies on third-party exchanges. They allow these exchanges via API keys or interfacing with FIX API connections directly from the user's platform.
These systems perform trades based on specific rules which have been programmed by human operators who create algorithms designed for a particular function such as reducing risk, entering at a certain price level, etc.
Underneath the hood of automated crypto trading are three types of bots that allow traders to always control their cryptos.
Black Box Trading Bot
Black box systems are used by professional traders who need software that can perform complex trades without any human intervention. Since there is no personal interaction with black boxes, they can accommodate situations where little to no technical knowledge about cryptocurrencies is required. These systems find the most profitable arbitrage opportunities between exchanges and automatically take advantage of them while keeping costs down, so profits remain high for users.
Grey Box trading bots
Grey box trading bots are also automated, but they are less complicated than black boxes. Expert traders usually use grey box systems because they need to adjust them frequently in response to market conditions.
Hybrid Trading Bots
These are the most popular types of trading bots that combine both manual and automatic functions. Users can provide orders manually or program their bots to do it for them, depending on the type of crypto-trading strategy they want to implement.
For example, some hybrid systems allow you to input a set number of buy and sell orders that will be triggered once the value reaches those levels making those opportunities more prominent and easier to seize.
When should investors consider using trading bots?
Automated crypto trading offers traders a greater degree of convenience that is suited not only for experienced traders but also for those who are new to crypto and look for simple ways to generate additional income from their existing portfolios.
Poorly executed trades could lead to sudden losses instead of gains. In addition, they may also lack the human judgment necessary in some instances, such as exiting an exchange during an emergency or taking advantage of opportunities that require immediate action.
So, is it a good idea to start trading with crypto bots? Whether you want to set up a bitcoin bot for scalp trading or planning to start leveraged trading - any product that you can trade manually, a bot can help you trade as well.
Since there are several types of trading automations, it's essential to understand these concepts to make the best decision when looking for a reliable bot.
What features to expect from a profitable crypto trading bot?
The first feature that a competent crypto trading bot must-have is a bunch of tools to analyze the market and accurately display and calculate profits. These tools help with making correct projections before an investment is made and accurately calculate profit and losses.
The next feature that a crypto trading bot must have is a diverse range of strategies to choose from. No strategy works for everyone, allowing users to try different things until they find the one that suits them best.
Wide range of supported exchanges
Making profits from the volatile cryptocurrency markets requires traders to invest in digital assets listed on more than one exchange. A good crypto trading bot should allow users to trade and monitor their portfolios seamlessly across as many exchanges as possible.
Not all the previously mentioned features are compatible with multiple devices, which is a big part of using crypto trading bots. You need to be able to check on your account wherever you are at whatever place. Whether the trading bot has a dedicated app or not, it should work flawlessly with mobile devices and tablets, as well as desktops.
Security and encryption
Another significant part that is a big deal is the security of a crypto trading bot. Since the market is actively developing, it might be pretty easy to cheat people out of their hard-earned cash with shady software or poor customer support. That is why trading bot’s security is as important, as its profitability.
Lastly, before moving on to our top picks for the best crypto trading bots, it's extremely important to consider how much each product costs since this factor directly impacts your return on investment (ROI). The greater the cost, the higher your ROI should be to cover the costs of using such software.
The prices vary widely on several factors, like the features trading bots offer, the number of exchanges supported, as well as many other factors that may directly impact your income.
Finding a trading bot is not hard, you just have to know what you are looking for. A great place to start your automated crypto trading journey is Bitsgap. With this bot, you can get everything you have read about in this article and try all its features for free for 7 days. This is one of the most generous trial periods on the market, giving into account that there are no limitations on trading volume and revenue generated during the trial period.
Currently, Bitsgap is one of the fastest-growing platforms for automated crypto trading. It has the most advanced grid bots on the market and smart trading tools and features, including TradingView charts, smart orders, and portfolio management tools offered across 25 exchanges. If you found value in this guide, then we strongly recommend checking them out. Always remember to ensure the security is top-notch. That is the essential part of an automated trading bot.