What is Automated Crypto Trading and How Does It Work?
Automated crypto trading allows you to actively trade digital currencies without the need for continuous monitoring of your computer.
Automated trading uses algorithms to buy and sell digital currencies at specific times. Depending on the automated trading strategy you use, trades may be based on asset prices, technical indicators, or the value ratio in your portfolio (rebalancing). If you don’t have the time to trade digital currencies and don’t want to hold onto them, automated trading in the crypto market is an excellent option. Several automated trading platforms are available, each with its own set of features and trading strategies.
Automated Trading Platforms
Automated trading platforms in the crypto market are automated software that trade cryptocurrencies for you. To use an automated crypto trading platform, you need to create an online account with a trading bot and choose a trading strategy to use. Once you have selected an automated trading bot, the program buys and sells your digital currencies for you based on the software’s parameters.
Most automated crypto trading programs work as APIs. API trading bots work as intermediaries that trade for you on another exchange that you are connected to. 3Commas is an API that you can use for automated trading on exchanges such as Binance, Coinbase Pro, Bitmex, and Kraken.
The newest and safest form of automated trading in the crypto market is automated trading bots that work on the blockchain. Instead of using a website or API, encrypted token trades use smart contracts on the blockchain. Smart contracts are code that performs financial functions independently, and this code is usually uploaded to the Ethereum network as Ethereum is a leading cryptocurrency that supports smart contracts.
Best automated trading platforms and bots in the crypto market
There are many options for automated trading platforms in the crypto market. These platforms operate very differently from each other and each has its own specific advantages and disadvantages. The suitable trading bot for you depends on the type of digital currency you want to trade, the exchange you use, and your risk tolerance.
Coinrule: The best automated trading platform in the crypto market for pre-set strategies
Coinrule offers the widest range of pre-set trading strategies and the crypto trading bot currently allows users to customize their investments with over 150 trading templates that automatically execute when market conditions meet pre-defined parameters. From stacking to long-term holding strategies and stop-loss settings, Coinrule is constantly introducing new templates to its platform.
While the number of templates you will have access to depends on the plan you choose, Coinrule offers a free package with 7 free template strategies and up to $3000 in monthly trading volume. Additional paid packages include features such as advanced charting options, unlimited use of templates, and even peer-to-peer (P2P) training and lessons.
Pionex: The Best for Extensive Trading
Pionex expands your horizons by offering 18 commercial robots that use unique strategies to provide you with results. These commercial robots are described in detail on the website so you can decide which one is right for you. You can contact the robot you think works, or you can use different robots until you find one that gives you peace of mind. These robots include:
Grid Trading Rot allows users to buy cheap and sell high in a specific price range.
Leveraged Grid Bot offers up to 5 times leverage.
Spot-Futures Arbitrage Robot helps small investors to have passive income with low risk. Estimated return for this strategy is 15 to 50% in April.
Martingale Robot buys DCA and sells once to take advantage of price fluctuations.
The Rebalance Robot helps you hold your coins.
The Dollar Cost Averaging (DCA) Robot adjusts frequent purchases at regular intervals to offset the effects of fluctuations.
In addition, the automatic trading terminal in the crypto market allows traders to set a stop loss, profit, and reverse in a trade.
With Pionex, you save money on your money because you only pay a 0.05% maker and taker fee for each transaction. There are no hidden fees, registration is free, and you can have money in your account that would otherwise go to greedy exchanges.
For more information, email or chat with Pionex. This company allows anyone to enter the crypto market regardless of experience or knowledge level. By using these commercial robots, you can understand crypto investment and gain more confidence in your portfolio.
StreetBeat: The Best for Automated Crypto Trading
Streetbeat is a fintech company that seeks to facilitate investment by combining fintech innovations and software. Based in Palo Alto, the company has a mobile application that provides its trading and automated trading services.
You can invest in a wide range of assets such as stocks and ETFs, but you can also invest in digital currencies, allowing the platform to do more for you. The customer-centric approach of the company makes it more pleasant for most investors and also offers:
Performance for investors at all skill levels Automated trading innovations No trading commissions You can start with less than $1 Generous rewards Low management fees
Remember, though, as useful as this platform is, your management costs may increase depending on the size of your portfolio. In any case, you get the support you need and can increase your portfolio without doing all the calculations yourself.
WunderBit: The best exchange rate
WunderBit aims to facilitate real-world use of digital currencies through a range of products and solutions. This financial institution offers a licensed, reputable, and regulated platform that allows its customers to buy and sell Bitcoin with ease and safety.
Currently, WunderBit offers a Bitcoin and other digital currency exchange service, a social trading platform, Bitcoin payment processing services, and non-custodial services.
Botsfolio: Best crypto trading bot
Investing less than 5% of your net worth in digital currency markets can push your portfolio towards better performance than even the best stock investors.
Just answer a few questions to find out how you can allocate investment into various digital currency trading strategies, add the investment amount to your digital currency exchange, and link it with Botsfolio within a few minutes.
The bots automatically trade from your account, and you can follow your automated digital currency trading activities in the Botsfolio dashboard.
Shrimpy.io: Best Exchange Connection
Shrimpy.io is unique because it invites you to manage your entire collection in one place. You can link all the exchanges you use, all your wallets, and manage your money without jumping around the internet.
Shrimpy supports 18 exchanges including Binance, BitStamp, Coinbase Pro, Kraken, and more.
Social trading allows you to copy an expert in the field. Yes, you can study cryptocurrencies and learn how to trade them, but nothing beats copying a real coach who can show you how to be a successful trader.
There is a cost-effective plan for everyone:
$15 per month for the Starter plan
$63 per month for the Professional plan
$299 per month for the Project plan
You can also read whitepapers on cryptocurrencies, developer information, and backtesting results that show your investments.
EndoTech: The Best for All Types of Strategies
EndoTech has been a major player in the automated trading scene in the crypto market for a long time. The platform was launched in 2012 when cryptocurrencies were in their early stages. EndoTech is an excellent option for cryptocurrency traders who want to entrust their trades to pre-set algorithms, eliminate emotions that often cloud judgments in trades, and only rely on strong trading signals. It is not a cryptocurrency exchange, but it connects to your exchange account via API keys. This may seem daunting, but EndoTech never allows withdrawals or transfers of your funds. The only thing it can do is trade on your behalf.
EndoTech is much more transparent in its past performance than many of its competitors. It proudly displays its 25 strategies with a chart of past performance and various useful statistics on its website. Many other automated cryptocurrency trading platforms offer only a fraction of their strategies. EndoTech is one of the simplest algorithmic trading platforms that can be used with a significant margin. All you need to do is set up a user account with a supported exchange (if you don’t already have one), pay reasonable fees for EndoTech, give them your exchange account API key, and choose a strategy. Soon you’ll see algorithmic trading in action.
CryptoHopper: The Best Choice for Beginners
CryptoHopper is a digital currency trading robot API supported by most major exchanges. This trading bot is the number one choice for beginners due to its affordability and unique trading features.
If you’re new to CryptoHopper, you can get a free 3-month trial period to test their services. After the trial period, you can choose from 3 subscription levels ranging from $19 to $99 per month.
If you want to familiarize yourself with a trading robot but don’t want to take any risks, CryptoHopper offers simulated paper trading. This is an excellent way to get to know the software before risking any money. CryptoHopper has an internal social trading platform where users can share their trading strategies, which is a useful tool for beginners.
CryptoHopper also allows you to use market indicators, perform test trades, and change your preferred currency. It sends timely notifications and gives you all the necessary access, so you don’t need to keep running it on your computer.
When to use a crypto trading bot
If you think a specific trading strategy can break the market, you should use a crypto trading bot. Using a crypto trading bot doesn’t guarantee breaking the market, but a trading bot simply executes trades for you based on an algorithm.
Another reason to use a crypto trading bot is to strategically diversify your cryptocurrency assets. For example, with Tokensets, you can hold a single token that represents a trading strategy that trades both Bitcoin and Ethereum based on trading indicators.
Types of cryptocurrency trading bots
There are two main types of crypto trading bots in the market today: cryptocurrency trading bot APIs and decentralized cryptocurrency trading platforms.
Cryptocurrency trading bot APIs: These are the most common type of crypto trading bots in the market today. Cryptocurrency trading bot APIs connect to other digital currency exchanges to manage your investments. If you already have a cryptocurrency brokerage account with a well-known exchange like Coinbase Pro, Kraken, or Binance, this is an excellent option.
Decentralized cryptocurrency trading platforms: Decentralized cryptocurrency trading platforms are the safest way to use automated trading in the crypto market. This type of automated trading uses blockchain technology to trade independent digital currencies. Your funds are held in a smart contract on the blockchain and you own a portion of the smart contract funds that can be redeemed through digital currency tokens issued by the trading platform.
The advantages of automated trading in the crypto market can be significant, such as:
- Timing: Since crypto bots trade based on software, they can buy and sell your digital currency much faster than you can manually. If you trade based on trading indicators, using a crypto trading bot for more precise market orders can be helpful.
- Repetitive tasks: Most available crypto bots trade 24/7. If you trade digital currency based on market indicators, you can use a crypto trading bot to perform your tasks.
- Consistency: Bots are much more consistent than humans because they can work without stopping and always execute commands based on specific indicators. Often, maintaining discipline while trading cryptocurrencies is challenging, so using a trading bot eliminates the risk of “emotional trading.”
- Time-saving: Using a crypto trading bot saves you time since the program monitors the market and executes trades for you. If you don’t want to keep an eye on digital currency markets continuously, an automated trading bot is suitable for you.
Disadvantages of automated trading in the cryptocurrency market can include:
- Security: While encryption robots are generally safe, you need to keep your encryption funds in an exchange to use a trading robot. Keeping your encryption in an exchange increases the risk of being hacked, but most major exchanges are generally safe. If you want to keep your digital currency more securely, you should use a hardware wallet.
- Monitoring: Even if a trading robot monitors the market for you, you still need to watch the prices of digital currencies because they are very unstable, and your trading strategy may not be aligned with market conditions.
- Experience required: Automated trading robots are used best by advanced traders. If you are not familiar with the trading indicators used by trading robots, you probably shouldn’t use a robot.
Final Words
Again, using a cryptocurrency trading bot does not guarantee that you will beat the market. Cryptocurrencies can be unpredictable and highly volatile, so trading based on technical indicators doesn’t always work. However, some crypto trading bots have a significant track record of outperforming the market. If you are trading based on technical indicators anyway, using a bot to save time and place more accurate buy and sell orders is advisable.
