Bots for trading on cryptocurrency exchanges. How to choose and use? Facebook VKT witter Mail.Ru Odnoklassniki LinkedIn Cryptocurrency trading is gaining popularity among users. Many people realize that this is a complex process that requires some training and skills. Therefore, users are trying to find a way out and use bots to trade cryptocurrency. But how correct is this approach and is it possible to earn something with the help of robots in the future? Automatic trading has long established itself in binary options trading and Forex, and now it has come to cryptocurrency exchanges. What is a cryptocurrency trading bot, can such a program be trusted, and which robots are the most reliable?
How the robot trader works
Bots for automatic cryptocurrency trading operate according to special algorithms, trading strategies, which, in turn, are created on the basis of technical analysis of patterns. To conduct an independent analysis, you will need historical data on exchange rate changes (charts for at least the last year), sometimes it is possible to find a relationship with the news.
In addition, after determining the patterns, the strategy is tested on the same historical data, the number of potential losses and profits is calculated. And if the results are satisfactory, the rules of the robot's trading strategy for the cryptocurrency exchange are created on their basis. Some bots additionally use indicators that allow you to analyze the current market situation, others are executed only when certain market conditions occur.
The trading strategy for exchange and arbitrage bots can be very simple, for example, like this:
- When the price of cryptocurrency decreases, you need to buy it.
- When the price rises, it must be sold.
Or much more complicated. The algorithm can take into account recent historical data, indicators, and be guided by signals. High-quality bots analyze more than a hundred parameters when placing orders.
In some programs, the algorithm does not change, but there are bots for which you can connect or configure additional parameters. This option is well suited for experienced traders who have a preference for their trading style.
A standard bot can perform the following actions:
- Assess the market situation, monitor the rate for a given period of time, make a forecast. When trading manually, it can show signals to the trader.
- Create orders to sell or buy.
- Provide reports on the received profit or loss.
Where can I get bots for cryptocurrencies?
There are three options for obtaining robots for trading electronic coins:
- Create the program yourself.
- Downloading the robot is free.
The first option is suitable for those familiar with programming. All bots are written exclusively for some kind of exchange. Accordingly, the site must offer an API. This is a complex of information about the state of trading and a set of functions that allows you to start trading according to user-specified parameters. When it comes to arbitration bots, they are written for several platforms.
The second option is suitable for those who do not know how to program or do not know how to write their own application. Today, quite a few companies are writing this kind of software. Moreover, the not only purchase is offered, but also a temporary rental of an advisor. Professional traders can order advisors from programmers, defining in the terms of reference all the necessary aspects that must be present in the program.
The third option is to download bots for free. This has its advantages in that you do not need to invent anything, write programs or pay money. But the disadvantage is that the user cannot be sure that the advisor will not start, for example, transferring all earnings to the internal accounts of third parties.
Do I need to use bots in trading?
This question is individual. It is definitely not recommended to give the advisor complete freedom of action.
In this case, the risks of incurring significant losses. Some Forex traders recommend launching robots and monitoring their work.
But in this case, the very meaning of their use is lost. After all, the trader has to constantly be near the computer. Why not make your own decisions?
In the world of cryptocurrencies, by the way, others are added to the problems with analysis. In particular:
- Some bots can transfer profit or part of it to the developer, not to the owner. Moreover, this may not be immediately, but after some time, when a certain amount is collected on the owner's account.
- Instead of trading, they collect information about the owner and pass it on to the developer.
- They sabotage the work of a trader in every possible way, trade the wrong assets, and give deliberately wrong signals.
The main advantages of robots for trading cryptocurrencies
- The speed of decision-making. Even experienced traders take some time to analyze the market situation. Beginners do it even slower. As a result, a trading opportunity may be missed. In order to avoid such situations, many traders prefer to use bots. They analyze everything much faster and make decisions faster than a person.
- The ability to analyze an unlimited number of pairs. If we compare a bot with a human in this parameter, the advantage is again on the side of the first. A person is simply not able to analyze a large number of assets and make an adequate decision. But some are trying to provide this work to bots, using only ready-made results from the work.
- No errors in the algorithm. A person in the process of market analysis can make mistakes. This is due not only to the level of training but also to the psychological state of the trader. Bots work well within the algorithm. If there is a signal, he will use it.
- 24/7 trading. A person needs rest. Many people cannot devote more than two hours a day to trading. The bot, on the other hand, works around the clock, it does not need to write or rest.
- Free time with the user. Using bots implies giving a person more free time. After all, he does not need to analyze anything. And many algorithms are set to fully automate trading from the moment a signal appears until a decision is made.
- Lack of emotion. A person is subject to various psychological states. He is passionate, may feel fearful or depressed. This affects the trading results. The bot does not feel any emotion. He is not characterized by excitement. It works only within the framework of its own algorithm.
- Traders often make one serious mistake. They do not know how to properly manage capital. The bot for the cryptocurrency market will operate according to the algorithm pre-installed in it. If a $ 10 trade size limit is set, for example, the bot will never change it on its own.
