Crypto trading bots were a sensation several years ago. They managed to bring considerable profit to those who knew how to use them properly. Essentially, they can still augment your capital. Changelly, together with TradeSanta, collected the basics of crypto trading bots to provide you with all the necessary information on how to build a trading bot, how to set it up, and how to make it work for you.
Table of Contents
What Is a Crypto Trading Bot?
As soon as it was clear that the crypto industry would keep on developing and expanding, some of the industry’s masterminds introduced bitcoin and other crypto trading bots to the community.
A crypto trading bot is a software program that automatically buys and/or sells an asset when its price reaches a certain limit. Crypto trading bots use exchanges’ APIs in order to merge and obtain all the necessary information and place an order on your behalf. Crypto bots usually analyze market data like volume, price, orders, time, and other vital factors that one should consider when trading. However, you want your trading bot to pay closer attention to other things so that you can easily set up your own preferences.
Trading bots are not the prerogative of the crypto world. They’re also used in the stock market trading for the same purposes: to help traders in increasing their initial investment. The Internet is full of tutorials on how to build a perfect trading bot and use it on NYSE, NASDAQ, and other stock exchanges.
How Does a Trading Bot Work?
As mentioned above, trading bots need to interact with crypto exchanges in order to obtain essential data and follow a certain algorithm of actions. Pretty much every cryptocurrency exchange provides its API for algo-trading.
Most trading bots work on a rather simple principle that can be described as “signal generator — risk allocation — execution.” It is the pattern behind every decision made by such bots.
The signal generator is the part where a bot makes its predictions. Data (be it collected from indicators or other sources) enters the generator, and it decides whether to put out a buy or sell signal. Afterward, this signal proceeds for the risk allocation.
Once the buy or sell signal is there, a crypto trading bot has to decide how much it should buy or sell. It determines whether to allocate a whole capital to the trade or just a part of it and so on.
Execution is the final part of the trade — that is the very part where the deal actually happens. With all the processes ascertained and decided, concluding the said deal is a simple task. While it may seem like this is the least important part, it is not so. If other traders use the same algorithms to conduct their trading, you may get an unfavorable deal at a lower price.
This part of the algo decides how best to conduct the deal itself: whether buying/selling in one piece will bring greater profits or not. So, to make sure that your trading bot is working in your best interests, you will need one to excel in all three parts of the trading.
Please pay close attention to the fact that a crypto trading bot requires access to your public and private API key. This necessity comes from making crypto exchanges believe that you authorize a trading bot to take action on your behalf.
Why Use Trading Bots
You may ask: Why would I even need to use a trading bot if I can do it myself? Let’s face the fact that time is the most valuable resource of (pardon the tautology) our time right now. Time is money, and a trading bot proves it perfectly. It has several important advantages over humans.
- We have limitations that bots simply don’t. We can’t monitor the market 24/7, and even if a trader sets up an intricate web of alerts, they wouldn’t be able to react to them immediately. Bots don’t need to sleep, eat, and do not get distracted.
- Trading bots also can react faster than any human, and every moment can cost traders money.
- They can analyze and predict how the market would turn earlier than a trader. Ultimately, this gives trading bots an edge and grants you a profit.
- Crypto trading bots will not only give you free time but also provide you with an opportunity for more efficient arbitrage trading.
- We tend to lose ourselves in the thrill, wishing for more money or wanting to return the losses, and this can lead to even more losses. A trading bot does not have that weakness as it operates on cold logic and does whatever is more profitable based on statistics. This means that bots will lose less often and bring more profits overall.
There are different reasons why humans may outperform trading bots on similar deals: taking risks may result in a bigger payout, or a hunch can allow guessing the trend. Bots are more effective in bringing in money than humans, and that alone should be a reason enough to employ them.
Best Crypto Trading Bot to Use in 2022
If you don’t want to spend your time and effort building trading bots, you can always use the already existing solutions.
TradeSanta is a cloud cryptocurrency trading software that helps you benefit from crypto market volatility. This is a ready-made trading bot solution that relieves one’s stress. With a native UX/UI, TradeSanta provides quick access to algo-trading on such crypto giants as HitBTC, Binance, Bitfinex, Huobi, and many others. According to TradeSanta, your crypto trading bot can be set up in just two minutes, and this is what literally saves you time.
Risk management tools, TradingView signals, grid and DCA bots, demo trading for testing strategies, and more are currently available on TradeSanta to help both beginner and expert traders with their trading routines. TradeSanta also offers video tutorials and comprehensive documentation to help newcomers with automated trading onboarding.
There are four types of trading packages provided: minimum (free trial), basic, advanced, and maximum. The latter costs $35 per month and gives access to enhanced opportunities.
How to Set Up a Crypto Trading Bot by TradeSanta
With all of that handled, it is time to actually set up your bot. TradeSanta provides quite an intuitive user experience, so you can set your trading bot efficiently and in a fast manner.
- Go to https://tradesanta.com and register an account.
- Once you’ve logged in, click the “+Create bot” button. You’ll be offered to choose a pair, strategy, and bot settings.
- Find the “Access point” section in your left menu, then click on the “All accesses” suboption.
- Click “Add Access” to create a new access point.
- On the next page, you will need to choose the exchange and fill in an API key and an API secret key.
- Your trading bot is ready to get out and start making your profit. Just check up on it and apply upgrades and fixes if necessary, and it will serve you well.
We’ve tried to answer the most vivid questions like what trading bots are, why traders use them, and how to create and set up one for yourself. The crypto market is the one that benefits the most from trading bots since most cryptocurrencies are really volatile assets. In this way, traders would need to make snap decisions. Even one or two seconds of delay can spell disaster for their investments.
Trading bots are not as limited in their perception, so they can make your trading more profitable overall, for the price of making slightly less money per trade. As many experienced traders would say, a consistent lower profit is much better than the inconsistent one. Stay tuned for more trading and crypto insights.
Cryptocurrency Trading Bots – Q&A
Here, we’ve collected the most frequent questions about crypto trading bots and provided the answers to them.
What is the best crypto trading bot?
TradeSanta has been on the market for four years. With top-notch expertise in mind, TradeSanta provides each and every user with an opportunity to take advantage of the crypto market.
Are crypto trading bots profitable?
If you configure them in the right way, trading bots can be extremely profitable.
Do crypto trading bots work?
Absolutely! They allow you to forget about the market fluctuations and make some money from crypto trading.
Are trading bots legit?
Yes. However, you should choose the project you want to use: read the reviews and try the product with a small amount of money.
What are crypto trading bots?
A crypto trading bot is a software program that works as a trader. You can either buy it or code yourself from scratch. The bot buys and sells cryptocurrencies according to the settings.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.