Guide to Crypto Trading Bots

By Jason Hulott | CryptoCurrency

Cryptocurrency markets run 24/7, unlike the traditional stock markets. There’s no downtime so faced with the choice of turning crypto trading into your full-time job and sacrificing all sleep or potentially missing out on lucrative transactions, trader bots have sprung up to fill the gap.

These bots can automate your trades, follow your instructions and give you a presence when doing other things but they’ve also sprung up like weeds. A casual search on Google reveals several hundred promising the Moon so how can you find the one that’s right for you?

What is a trading bot?

Trading bots have been part of the landscape in stock market trading for years but were too expensive for the layman. Cryptocurrency exchanges run on the blockchain, and the open nature of that structure gives users access that traditional markets reserved for professionals. A cryptocurrency trading bot will monitor the exchanges you point it at and trade on your behalf based upon the settings you have given it in response to several triggers. Bots have some functions as standard and you then customise them according to your preferred trading strategy.

A bot is emotionless, so removes that factor from the trading process. Your fondness for a particular coin, over-enthusiasm at a rising market or panic at a fall won’t factor into the automated trades. This allows the bot to apply their rules objectively, based purely upon market conditions.

Bots make use of data and past performance to make predictive trades but it’s important to remember that they are not intelligent in their own right. They use APIs to read data directly from the exchanges and can therefore make trades far more quickly than a human. Automating these tasks can free up your time and make trades that generate micro-profits worthwhile.

Essentially a bot gives you a trading terminal connection to your exchanges of choice and trade without making it your life.

Common Features

These may be familiar if you’ve played the stock market previously, but may be new if cryptocurrency trading is your first experience.

Stop Loss

This function allows you to set a maximum loss you’re willing to tolerate when prices are falling, i.e. in a “bear” market. You set this price in your bot and it will sell your coins when they hit that level to limit your loss.

Take Profit

The opposite of Stop Loss, you set a level at which to sell your position and realise profits from a rising “bull” market. The bot will then automatically make that trade when the threshold. If the market continues to rise, you may miss out on potential profit by selling too soon.

Signals

Some bots operate a system by which users can sign up to receive “Signals” from experienced traders, which the bot will then follow. This is normally tied to the Telegraph platform and you can buy into receiving signals from traders who have a similar focus to you or perceived market success. This is a social media tool, which allows you to research the Signallers before signing up to them.

Exchange Arbitrage

Make a profit on the difference in coin prices by trading between exchanges. Cryptocurrency exchanges used to vary their prices but they have since stabilised to be closer, making Arbitrage harder. Automating the process maximises your chance of a profitable transaction as the bot can react make trades faster than a human broker.

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Strategies and Templates

It can be daunting to customise your trading bot, especially if you’re a novice trader. Buying strategies and templates from a marketplace tied to your bot of choice simplifies this process. Following the templates you can set your bot to follow a certain strategy. For example, the template may have a focus on specific coins or aggressive or cautious deals.

Always read the reviews to see how much success template users have had before making your decision. It does not tie you to a template and can tweak your settings once you have more experience but they give you a starting point.

Cloud Hosting

Cloud hosting makes your bot available 24/7, so it can react to market movements instantly. If it needs a local install, then the terminal is only available while that machine is running. Running a machine day and night can be costly and is impractical for most users, so if you are happy with the security a cloud install is a better solution. It also means that updates and patches can be applied centrally instead of relying on users to remember to do so.

NB: All 5 of the following bots make use of Cloud Hosting.

So let’s take a look at some of the options

Cryptohopper

Cryptohopper

The brainchild of a pair of brothers, one a day trader, the other a web developer, Cryptohopper started as a personal tool to automate the trading process. It’s since evolved into a highly customisable bot, with the emphasis on applying your personal trading strategy. The marketplace hosts free and paid templates and Signals, and you can track their progress daily to find what works best for you.

A highly versatile bot with good support and tutorials for each stage of its setup.

Key Features

  • Stop Loss
  • Take Profit
  • Signals
  • Templates
  • Scalping (realising micro-profits from small market rises – impractical for a human but an ideal automated task)
  • Arbitrage
  • Back-testing (see how your strategy would have performed based on historical data)

Free Trial?

  • 7 days of “Explorer” features, the basic package.

Price

  • From $19/month

3Commas

3Commas

The USP of 3Commas is its emphasis on market analysis and prediction. This allows it to run Trailing Stop and Profit functions which the makers claim will help you realise a profit even in a falling market. The Smart Cover feature will make additional trades in response to unexpected market movements to maximise your potential profits.

This bot has a lot going on for the experienced trader, but is less intuitive to set up and the more advanced features are only available on the higher-priced subscriptions. Huboi exchange account holders can use 3Commas for no additional charge.

Features

  • Stop Loss
  • Take Profit
  • Signals
  • Trailing Stop/Profit (This prevents the bot from buying or selling too soon, when a price may fluctuate based on previous performance)
  • Smart Cover
  • Automated Shorting (selling then setting a Buying order when the coin drops to a pre-set price)

Free Trial?

  • 3 days on the “Pro” package, normally $75/month
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Price

  • From $22/month, bespoke “Enterprise Plans” are available for customised features.
  • Commission-free trades

Crypto Trader

Crypto Trader

This service needs a certain degree of experience with coding in setting up your own strategy to get the best results. Alternatively, you can pick up a strategy designed by other users through their marketplace. This makes it less useful for beginners looking for something with an easier learning-curve, but once you get past that the customisability makes Crypto Trader one of the most popular bots around.

Some features are only available on the premium plans and payment is via Bitcoin, Litecoin or Maker DAI. Currency trading limits start at $1,000 and rise with the level of plan.

Features

  • Back-Testing
  • Email/SMS Alerts
  • Strategy Marketplace
  • Short Trading

Free Trial?

  • No

Price

  • From 0.0021 Bitcoin/month

Kryll

Kryll

Ease of use is the key to Kryll’s design. You build your trading strategies using their Visual Editor, with an easy-to-understand drag-and-drop interface. Blocks can contain Conditions, Technical Indicators and Notifications, to name but a few. No coding knowledge is required to build a comprehensive strategy and you can back-test your creation with up to 24 months of data.

If you’re less confident of your strategy development skills, you can choose from a wide range uploaded to their marketplace.  You can have multiple strategies saved on the system and switch between them as and when your needs change. Kryll is a relatively new platform so functionality is being added as it’s developed but it’s already a powerful tool presented in a user-friendly package.

Features

  • Back-Testing
  • Visual Strategy Editor
  • Strategy marketplace
  • Detailed Tutorials

Price

  • “Pay as You Trade” model, no monthly subscription. When you set a Strategy as Live it charges you 0.033% of your current investment per day. Testing strategies costs $0.06/day.

TradeSanta

TradeSanta

In many ways TradeSanta is “my first trading bot”. Their stated goal is to make trading available to everyone and setting up your first automated bot is deliberately simple. A wizard guides you through the process, letting you set up triggers, a long or short trading strategy, which pair of currencies to deal in and your profit level. You can have multiple bots running with different settings, depending upon your payment plan.

TradeSanta is not laden with features to avoid confusing beginners but it still manages to pack in effective automation in an affordable package. Ideal for those brand new to cryptocurrency trading to see if it’s for them.

Features

  • Wizard-Based strategy building
  • Extra Orders (the bot will take advantage of unexpected market movement by buying or selling extra coins as appropriate to give you the best result)
  • Long and Short trading options

Free Trial

  • 5 days at the “Basic” plan

Price

  • Free for 2 bots (strategies) live at once, then from $15/month for 49 bots. The $20 and $100 plans offer commission free trading.

From TradeSanta‘s hand-holding approach to the powerful customisation of Crypto Trader there is an entry point for anyone interested in automating the trading process on cryptocurrency markets. Just like the traditional stock market, though, no one strategy is guaranteed to work and past performance is no indicator for future trends.

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About the Author

Jason Hulott is Business Development Director at Digital Marketing Specialists, Speedie Consultants. He is Google Partner certified. His role is to identify and implement traffic generating and revenue increasing ideas for our client base.