Best AI Crypto Trading Bots
The stock game is a good way to make money for people who understand its intricacies. In the stock or Forex markets, there are certain patterns and signals that indicate a possible trend change. For the cryptocurrency exchange, not all of them are applicable, since it has its own characteristics.
Most inexperienced traders who want to make money on cryptocurrencies prefer to use AI crypto trading bots. Their main goal is to automate the trading process. Let's see if money is easy in crypto trading and how bots can help in trading.
Using computer programs to automate routine work is a completely normal practice. In most industries, technology has long been introduced that, without human intervention, creates products according to predetermined algorithms.
What are Trading Bots and How to Use ThemCryptocurrency trading robot is a specialized computer program, the purpose of which is to track fluctuations in digital currency quotes on the trading platform, identify patterns and make transactions according to the parameters set by it. On cryptocurrency platforms, unlike classical ones, a lot depends on the holders of large crypto packages, who can increase or decrease the rate if they wish, but the basic mechanisms are similar.
Depending on the complexity of bots, the number of criteria for their functioning varies.The simplest ones buy coins within a period of a declining rate, and sell on an ascending curve. More complex robots can take into account more indicators: analyze trends for previous periods, buy or dump crypto only in a certain range, etc. According to the model of work, the programs are divided into the following types:
Customizable. These are AI cryptocurrency trading bots that only operate when certain market conditions occur. A user can choose the trading strategy himself or use the automatic setting.
Scripting. Such robots are the basis ("skeleton"), based on which users can program their own trading strategy. Most often, large speculators using a unique trading strategy turn to their services.
According to the task characteristics , there are two main types of AI bots for trading crypto:
Trading. They carry out operations within one specific cryptocurrency exchange based on specified indicators. Profit arises from the difference between the buying and selling rates.
Arbitration. They monitor the situation and work on several exchanges simultaneously. Profit is the result of buying Bitcoin cheaper on one exchange and reselling it on another exchange at a higher rate.
The more indicators on which the program is configured, the more the speculator has the opportunity to influence the final result. However, for beginners, a large number of parameters can be confusing, so they usually prefer auto-tuning or bots with built-in trading script options.
There are different classifications of trading bot, the simplest is the division into:
The first category includes trading bots that make a decision to open an order, guided only by price fluctuations. Often they are also called speculative.
The only task of the bot is to buy low and sell high. In practice, this is not always achieved, since cryptocurrency rates behave non-linearly. The fall can be abrupt, in which case the bot will work against you.
Having bought a currency when the exchange rate falls, the bot will continue to do this at the next jumps. As a result, when the rate starts to grow, the deposit will go negative. Example:
- at a rate of 1000, the bot bought 3 lots;
- at a rate of 800, the bot bought 3 more lots;
- at a rate of 500 – 3 more lots;
- all nine lots sold at a rate of 600.
Let's calculate the profit from such trading: 5400 - (3000+2400+1500) = -1500. Accordingly, instead of fabulous percentages, the bot will bring the deposit to a minus.
Advanced Best AI Bots for Trading Crypto
“Smart” trading bots, which take into account dozens of factors, partially solve the problem. They can calculate jumps, pivot points and more. But the stereotyped and limited actions still remain.
Such bots for trading are mostly paid and require capital investments for serious earnings. Amounts up to $1,000 are not enough, even to earn money for a license.
Trading bots advisors do not make transactions automatically, but only tell the trader that now it is a good time to buy or sell a lot. The expediency of using these programs causes the toughest discussions among experts. Trading bots don't do anything that a trader can't do without their help. On the other hand, they monitor the market constantly, so they can protect you from erroneous conclusions.
On the Internet, you can find many robots that help in trading. Some of them are developed by reputable companies, others are the fruits of crypto enthusiasts work. There are paid and free programs, the user can choose his own computer advisors.
Let's consider a simplified trading bot mechanism:
- rules are created;
- a strategy is developed;
- writing code.
Then the software remains to be connected to the trading account and starts earning money. But the income is directly proportional to the quality of the bot. Most programs use fairly simple, formulaic strategies that are far from always effective. Therefore, if the program promises to make 300% or even 1000%, you should not take this information literally and consider the possible profit.
Bots ProfitabilityMost bots provide real income of 20-60% of the deposit per month. Under favorable circumstances, the percentage can be much higher, but this is more an exception to the rule, not the norm.
How does trading happen?
- the bot exchanges data with the exchange through a secure communication channel;
- receives data on quotes;
- conducts technical analysis according to a given algorithm;
- opens an order to buy or sell.
The main advantage of cryptocurrency trading bots is that they work 24/7. This allows, in theory, to get more profit, since the crypto market does not have a standard working session and is available to players constantly throughout the day.
To put it simply, trading bots basically apply variations of scalping. By making dozens, and sometimes hundreds of transactions per day, it turns out to achieve a good margin.
During stagnation or excessive market volatility, bots can, on the contrary, drain the deposit, since during these periods it is practically impossible to predict trend reversals using standard methods.
Cryptocurrency Trading Bots EfficiencyThe fundamental difference between the cryptocurrency market and the stock market is that the laws of economics do not work for digital assets. The rate of Bitcoin and other altcoins is strongly tied to the news background. Moreover, all altcoins have an indirect relationship with Bitcoin itself. This means that the price can change many times during the day and is based on subjective external factors that are difficult or even impossible to predict.
At the same time, the best AI bots for trading cryptocurrency use EMA data for technical analysis. This is a specialized indicator that allows you to determine changes in quotes over a certain period of time.Thus, technical analysis is based on retrospective data and tends to form cyclicity, as it happens in the classical market. This approach is ineffective and in practice rarely leads to high earnings.
Cryptocurrency Trading Bots RisksOf course, choosing a bot as your only trading tool is a risky decision in itself. But in this case, we are talking about the fact that a person can make decisions based on instinct.
The bot does not have such an opportunity, so if it does not see the prospects for a deal in the future, the best moment to enter or exit the market will be missed. Trading bots do not know how and cannot take risks, respectively, they do not bring in excess of profit.
Also, experienced crypto traders note that most automated trading software can produce good results. But it shouldn't be made into a canon. This is a tool for beginners, as well as a rather expensive IT product with clever marketing. In the first place, developers earn on such software. Traders rarely make big money on bots.
Advantages and Disadvantages of Trading CryptobotsAs we have already said, the main advantage of cryptocurrency bots is that the trader himself no longer needs to constantly monitor the state of the virtual currency market and calculate the moments for opening positions.
The negative impact of the "human factor" – emotions, doubts, fear – is reduced, especially if the amounts are serious. Cryptocurrency bot easily recognizes graphic patterns, candlestick patterns, quotes movement directions and trend reversal points, which are often invisible to a trader.
A properly configured robot trader analyzes much more information than a human being, and is able to conclude more efficient transactions, as it searches for the most optimal options.
Unfortunately, there is a certain risk that some novice traders stubbornly do not notice. And it consists in the following:
These same bots are now available in large numbers even in the public domain on the Internet. Finding and choosing an assistant for the request "download a cryptobot for trading" is a task for half an hour maximum. However, the real quality of these programs is unknown to anyone. It is easy to make a mistake in the settings or launch an initially weak bot. The result is predictable – a quick drain of the deposit. And this is the simplest case.
The main disadvantages of bots for trading on the cryptocurrency exchange stem from their own advantages:
This is a strict adherence to the algorithm embedded in the cryptobot. Any shifts, quick deviations, short-term fluctuations and other insignificant factors will give the robot false signals for making trades. A human trader understands this and can predict further developments. Robots are not able to do it. Such quick transactions can easily drive you into debt.
The second minus is the absence of that same "human factor". If a person is still able to stop in time, wait out a negative development of events or take some action to reduce financial losses, then the cryptobot will continue to make unprofitable transactions until the deposit runs out completely.
What to Consider When Choosing a Cryptobot?Choosing a quality cryptocurrency trading bot is a difficult task.
First, it is worth considering that there are many malicious developments on the market.
Secondly, you need to understand that no strategy can guarantee a stable income. Some bots trade with profit in a bear market, others in a bull market. The trader must constantly monitor the work of the bot, make adjustments to the settings, taking into account market movements.
If the developers promise a stable profit, check all the working conditions of the bot and study the feedback on the strategy on the forums. As a rule, such algorithms are based on two indicators. A cryptocurrency bot that trades based on a pair of indicators will never bring a stable income. In the worst case, you can go into a serious minus or completely drain the deposit.
Does a Beginner Need a Cryptocurrency Trading Bot?A beginner should understand that there are no stable earning autonomous cryptocurrency bots. The idea of “launch and forget” does not work – there is no easy money. A trader must be able to set up a trading robot or write algorithmic strategies on his own. Only then will he be able to create a profitable strategy.
Without trading experience and understanding of market mechanisms, a novice trader will not be able to create an effective strategy. Using pre-installed cryptocurrency bots, a beginner runs the risk of losing his deposit. First of all, you need to learn how to trade on your own. After that, you can use bots to download from routine actions and diversify risks.