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Let's face it, crypto trading can be difficult. Even for seasoned investors, knowing when to buy or sell isn't as easy as it sounds. Traders also have to put emotions aside to make smart trades. Thankfully, there is a solution for this! It's called a crypto trading bot. When set up right, crypto trading bots can yield impressive returns and are less time consuming for the investor. Let's dive into the what and how behind trading bots.
You might have heard of popular trading bots like StoicAI and CoinRule that trade Bitcoin, Ethereum, and hundreds of other cryptocurrencies automatically. Crypto trading bots are computer programs that help take the human error out of crypto trading. Using programmed software, crypto bots can buy, sell, and hold digital assets. Crypto bots aren't fully automatic; they require the user to set parameters that guide how the bot acts. There are different types of crypto bots on the market that all perform a different trading strategy. Some common types include market maker bots, coin lending bots, arbitrage bots, and trend trading bots. It's important to research the different types of bots to best understand which bot best suits you and your trading strategy.
Crypto bots take out a lot of the grueling work of the crypto trader. First, you'll want to choose which bot to use (we list some popular bots below). Once you have your account set up, you'll need to set up a crypto trading bot. You'll first decide which crypto pair or fiat currency you want to exchange. You'll then want to set parameters like buy price range, sell price range, and risk that you want the bot to use when it trades. This is a super important step because they bot will act based on the parameters you set. Setting parameters requires a lot of research and knowledge because your bot's performance is based on these parameters.
After setting up parameters, you'll need to decide how much money (or cryptocurrency) you want to allocate to the bot. The more money that the bot has to use, the better because they will be able to cover a larger trading spread and volume. You'll also be able to set the specific coins you trade in some platforms (i.e. Bitcoin, Ethereum, Solana etc). Once your bot is set up, you're good to go. Bots use data analysis to quickly analyze large amounts of data on the cryptocurrency you choose. This analysis helps the bot notice trends, to be able to know when to trade. As the bot notices trends, the bot will be able to make predictions on the best times to trade.
Crypto trading bots are offered by a lot of companies on apps or websites. On the company's platform, users can track the performance of all of the bots that they set up. Users also are able to connect a crypto exchange to their crypto bot account. Some of the crypto bot companies are crypto exchanges like eToro. You can find reviews of crypto trading bots from users who have tested them and shared their results before you pick the right service for you.
One of the biggest advantages of crypto trading bots is that they take some of the human error out of trading crypto. Certainly, they can't take all of the human error because you'll have to set the parameters yourself. However, the biggest mistake from new investors is that we they trade with their emotions. Having a logic based bot making the decisions, will help you invest like a seasoned investor. New investors often buy into crypto when there is a lot of hype about the asset. This can lead to buying during high periods, so they're forced to cut losses by selling low. Crypto bots take emotion out of trading by solely following the parameters you set.
Another way crypto bots are advantageous is that they can trade 24/7. Sometimes the market changes a lot when we are sleeping or not paying attention to the market. Crypto trading bots can trade 24/7 making it easier for them to capitalize on advantageous trading times. Crypto bots can trade thousands of times per day making it possible to have positive returns even when the market goes down.
Crypto trading bots are very useful when done right. There are a lot of crypto trading bots on the market, and it's important to research which bots are right for you. As you take time to set up your bot correctly, you'll realize that crypto trading bots take a lot of the hard work out of crypto buying and trading.
Below, we've included some frequently asked questions relating to crypto trading bots.
Setting up a crypto trading bot varies between the different bots that are available, but they generally follow three simple steps. First, connect your exchange or wallet to the trading bot. Two, select the strategy you wish to implement and how much of your crypto should be managed by the bot. Three, review the rules chose and set the bot live.
Yes, most crypto trading bots cost money. Some charge a monthly or annual fee. It's important to realize what the cost structure of the bot is before you sign up.
