The internet has changed the way money works forever. Not only has it changed the way we do online business, but it has also changed the way money works.
In the beginning, most people didn’t think much about cryptocurrencies, and some thought they were nothing more than a niche. But the technology (blockchain) used to create cryptos has also shown that it can be used in other ways that could even change the way we do business and talk to each other online.
One thing that cannot be questioned is that cryptocurrencies are here to stay. In the financial world, time waits for no one. If you want to make money, you have to act fast because the financial market is constantly changing.
Of course, this does not mean that people should make quick decisions. Instead, it means that if you want to act quickly, you need a safe, well-thought-out plan.
Since cryptocurrencies are traded 24 hours a day, 7 days a week, it can be difficult to keep up with market changes and everything else that comes with it. This is where crypto trading bots come in.
What is a trading bot?
A bot is simply a computer program that performs simple but important tasks automatically. In fact, it is said that half of the traffic on the internet is caused by bots and the various things they do online.
Crypto trading bots work in a similar way in that they perform certain tasks by combining different technical indicators, artificial intelligence or rules to a algorithm.
If you have a cryptocurrency trading bot, you don’t have to keep an eye on it all the time. Instead, you can let the bot buy, sell, and hold at any time and from anywhere.
When a real crypto currrency like Bitcoin, Ethereum, Dogecoin, Cardano or Ripple experiences ups and downs, the bot can invest in these currencies at the right time.
Cryptocurrency trading bots have several advantages
Decision speed
Even traders who have been trading for a long time need time to watch the market. Everything is done gradually by new people. This can cause a trading opportunity to be lost. That’s why traders often use bots. They can look at everything and decide what to do, much faster than a human can.
Ability to analyze as many pairs as you want
When we compare a bot with a person in this way, the bot has the upper hand again. Sometimes it is simply impossible for a person to look at many assets and make the right choice. So many traders let bots do this job for them.
There are no errors in the algorithm
When doing market analysis, a person can make mistakes. This is due to both the trader’s level of education and the way he or she thinks about the market. Bots work in a clear way that fits the algorithm. The bitcoin trading bot will use a signal if there is one.
Free time of the user
When people use bots, they have more time to spare. After all, he doesn’t need to analyze anything. And many algorithms are set up in such a way that trading is fully automated from the moment a signal appears until a decision is made.
Lack of emotion
People go through different mental states, which can affect how well they act. The bot that trades crypto has no feelings. He doesn’t feel anything. It only works within the limits of its algorithm.
Discipline
Many traders do not know how to handle their money well. The algorithm built into the bot for the cryptocurrency market will tell it what to do. For example, if the deal’s limit amount is set to $10, the bot will never change it itself.
Trading 24/7
Everyone has to sleep. Many people cannot trade for more than two hours a day. The bot trades all day and night.
Cryptocurrency trading bots can be obtained in three ways:
Building a bot from scratch
This choice is good for people who know how to write code. All bots are specially made for a particular exchange. So the platform must have an API. This is a set of information about how trading works and a set of features that allow you to start trading based on automated trading.
It’s not easy to build a crypto trading bot that makes profits for you! For profitable crypto bot trading you need a great strategy and this takes years for professional development to have something similar like Tradeoshi, built from scratch!
Investing in a crypto trading bot
This choice is good for people who don’t know how to code. You can also not only buy the bot, but also rent it.
One of the best crypto trading bot is named Tradeoshi´s Merlin, it use over 100 different technical Indicators with lot of triggers and advanced features like machine learning, quant-trading signals, DCA-features, a big risk-management system and mutch more. This takes years in development to have something similar with building from scratch.
Building a crypto trading bot with construction kits
There are also a few platforms that offer a tool to build crypto trading bots without programming knowledge, this is called a bot construction kit. At Tradeoshi Labs you can build and backtest your own bots for free, it offers many possibilities with 130+ technical indicators to create algorithms and finally run your bots on the platform.
How do these bots actually work?
Even if you use an automated crypto bot, you will still have to do something. You still need to enter your limits, trading needs, and parameters, but after that, the bot will take care of everything else.
By communicating directly with crypto exchanges, the trading bot will help you be more efficient, make and execute decisions and trades faster, and make fewer mistakes as it is not influenced by your emotions or other mental factors. There are three ways trading bots work, namely:
Signal Generation: This has to do with the ‘signal generator’, the part of the bot that does the trader’s job. Based on technical analysis indicators and market data, it makes predictions and finds possible trades.
Risk allocation: This mainly depends on how much money you have set aside to trade. As for the risk allocation, the bot calculates how much capital to put into a trade based on the rules and parameters entered by the trader.
Execution: As the name of the word suggests, this is where the action takes place. At this stage, cryptocurrencies are bought and sold based on the parameters and signals already set. The signals are then converted into API (Application Program Interface) requests that the crypto exchange can understand and execute.
