There are several crypto trading bots on the market, but choosing the best crypto trading bot becomes a problem. Trading cryptocurrency is one of the most profitable ways to interact with cryptocurrencies. A lot of traders come to trade cryptocurrencies as a result of the level of profits gotten from cryptocurrency trades.
Although the cryptocurrency market gives a lot of profits, at the same time, it can cause a lot of loss of funds to the trader because the market fluctuates a lot and is highly unpredictable. One of the best ways to avoid this problem and still profit from the market fluctuations is through the use of crypto trading bots.
In this guide, we will take a closer look at what crypto trading bots are and the best crypto trading bots for traders.
What is a Crypto Trading Bot?
Crypto trading bots are programmed algorithm that helps traders make automated trade decisions quickly and without sentiment based on market price movements.
Crypto trading can be very profitable, while at the same time, it can lead to huge losses due to instant price movements and volatility. Due to the high profitability of the crypto markets, traders confront the issue of market sentiment and take emotional moves due to emotional bias. This can be very ineffective as trading decisions should be made based on market analysis and not emotions.
This is where crypto trading bots come in. Crypto trading bots make trading decisions without human emotional bias, swift buy and sell assets, taking advantage of market price movements and trend patterns.
The use of crypto trading bots has increased over the years due to the notorious nature of the crypto markets. According to estimates, crypto trading bots account for 70 – 80% of the overall cryptocurrency trading volume.
Types of Crypto Trading Bots
Crypto trading bots seem to have dominated the cryptocurrency markets, but there are different types of crypto trading bots. Some of these include:
#1. Arbitrage bot
Arbitrage bots are one of the most popular crypto trading bots used by traders. Arbitrage bots analyze and detect price differences between exchanges and make buying and selling decisions to take advantage of these price differences.
Price differences in a crypto asset between different exchanges can be very swift and require quick action, and this is where the arbitrage bot comes in.
These price differences in exchanges provide arbitrage opportunities that can be taken advantage of swiftly to make profits. The arbitrage bot continuously analyzes and detects price differences in exchanges and makes swift buy and sell actions for profit.
#2. Trend trading bots
These types of bots, as the name implies, take into consideration the trend pattern of a crypto asset to make buy/sell orders. The trend trading bot analyses the trend pattern crypto-asset forms and places long positions in an uptrend and short positions in a downtrend.
#3. Crypto lending bot
This type of bot helps traders scout for lending opportunities with good interest rates and lends out coins as loans to these margin traders. This takes the stress off the trader of searching for high-interest lending opportunities for margin traders.
List of Best Crypto Trading Bots
As much as crypto trading bots are quite effective and can be profitable, it is important to also note that they are trading programs, and choosing the wrong trading bot can lead to errors and grave losses. Traders are advised to properly scrutinize before choosing a crypto trading bot.
Here is a list of the best crypto trading bots below.
Cryptohopper offers services for both beginners and advanced traders. It is considered one of the all-around best trading bots because of its large wealth of resources, materials, signals, and templates helpful for beginners and also because of its tools, which allow advanced traders to create and backtest their trading strategies. Its service fees range from $0 – $99/month to fit every budget. Cryptohopper also works with over 100 different tokens on 15 exchanges and has a wide number of users, ranging from hundreds to thousands of users.
Trality is an easy-to-use Python integration and documentation bot that makes it easy and transparent to develop trading bots. Trality stands out from its competitors due to its powerful Python API, which lets traders use the language to create trading bots. Trality offers state-of-the-art tools and creates a chance for traders to grow and develop with super creative and educational content.
TradeSanta is a trading bot service that prides itself on being a beginner-friendly and easy-to-navigate interface. It is quite easy and affordable for beginner traders to set up and use trading bots on TradeSanta. TradeSanta also has a variety of options such as risk management tools, affordable pricing, approachable mobile, and desktop interface. However, its most notable feature is the customer support service, which is highly responsive compared to the rest of the competition. TradeSanta pricing ranges from $25-70/month.
Shrimpy is rated as one of the best social trading bots. It is focused on long-term portfolio management while connecting users to a social platform to promote interactions, and it also has a feature where traders can copy other high-performing traders’ strategies. Top investment funds that traders can copy on Shrimpy include Binance Labs, Coinbase Ventures, Blockchain Council, etc.
3commas is one of the best trading platforms for advanced traders. It provides automated strategies and setups for traders to trade options. Trading options can be very high risk, the 3commas bots have been set up to automate buy and sell options strategies. It can be very suitable for advanced traders as the bot runs 24/7 although it has a subscription fee of $99/month as of the time of writing.
This is one of the oldest trading bots available and also the most respected. It offers trading activities on around 37 different cryptocurrency exchanges and allows traders to create their technical analysis strategy. HaasOnline gives access to its trading tools 24/7 all year round. It is considered the best trading bot for intermediate to advanced traders.
Pionex is one of the world’s first crypto exchanges with inbuilt crypto trading bots. Pionex gives traders access to 12 free trading bots and has a variety of different trading bots available. It has one of the lowest trading fees and also aggregates liquidity from some of the world’s top cryptocurrency exchanges like Binance and Houbi Global.
Pionex grid trading bots give traders the ability to buy low and sell high within a specified time range. However, it is also important to note that there is no support for custom trade strategies available. Pionex is licensed and approved by US FinCen’s MSB (Money Services Business).
Is Crypto Trading Bot Profitable?
It is important to note that crypto trading bots are simply algorithmic trading software. They do not completely assure profitability, and they were designed for traders, not investors. This is because working with trading bots requires proper knowledge of trading. However, trading bots make trading easier for crypto traders. It is not advisable for newbies to also use trading bots.
Advantages of Crypto Trading Bots
Trading the cryptocurrency markets can be quite profitable if volatility is used as an advantage.
However, traders can have some barriers when trading cryptocurrencies due to their notorious nature, so that’s where the use of crypto trading bots comes in. Some advantages of cryptocurrency trading bots include
- Efficient: Crypto trading bots have proven to be quite effective in making profitable trading decisions and managing buy and sell actions. Crypto trading bots eliminate human errors and inefficiencies as they take into consideration market analysis, trend patterns, price movements, etc., and make trading decisions based on the information gathered from these metrics without the emotions that humans infuse. Crypto trading bots are also active 24/7, making them more efficient and profitable.
- More powerful: Trading bots have proven to be more powerful in trading because they process a ton of information at once before taking trading decisions. Data gotten from different sources are taken into consideration by the trading bot while analyzing the market and making buying and selling decisions. It would be more difficult for a trader to analyze a load of data at once when analyzing the market.
- Emotionless: Crypto trading bots are algorithmic programs that take trading decisions for a trader. Since they are trading programs, they do not have the usual hindsight bias that is seen in traders when making trading decisions. Crypto trading bots rely on analyzable data and metrics gotten from the market to make buying decisions and not on any form of emotion.
Disadvantages of Crypto Trading Bots
Even though trading bots can be very profitable, they can also have a few disadvantages that are important for traders to consider when using trading bots.
Some of the disadvantages of crypto trading bots include
- Using crypto trading bots can be risky in highly unpredictable market conditions: The cryptocurrency markets can be highly unpredictable sometimes, and these unpredictable responses can become an issue when trading with trading bots. For example, the recent downturn of the terra ecosystem, which greatly affected the entire cryptocurrency market, was highly unexpected and its large-scale effects on the rest of the market were very much unpredicted. During times of highly unpredictable markets, a more psychological-based approach to trading proves to be more appropriate.
- Possibilities of programming errors: There’s a possibility for programming errors in the trading bot, especially when setting up the bot from scratch. It is essential to observe the bot to notice when there are some errors in trades and less calculated trading decisions by the bot.
- Using trading bots also requires adequate knowledge of trading: Using trading bots makes trading cryptocurrency markets easier. However, they might not be beginners friendly. The use of trading bots requires proper knowledge of trading and managing trading bots to properly maintain the bot and make buying decisions for the bot.
Crypto trading bots are programs that can make crypto trading easier and more profitable for traders. Most traders find it easier to use trading bots since they are not prone to human errors associated with traders, such as emotional decisions and hindsight bias.
However, it is still important to take into consideration the type of trading bot used, as using the wrong trading bot can lead to great losses for the trader.