Automated trading bots are actively used in the cryptocurrency market as well as in traditional financial markets. Trading bots are becoming more popular among traders, allowing them to constantly monitor their trading. Bots work 24/7 even when traders are offline. In addition, a correctly selected bot allows you to make transactions faster and more efficiently than by doing it manually. In this article we will learn how bots work, what their pros and cons are and review the best trading bots for 2020.
What are cryptocurrency trading bots
A bot is a program that has a specific algorithm. It buys or sells assets based on market conditions. The first trading robots appeared in 2012, and since then they have become more and more advanced. According to some estimates, more than 90% of short-term transactions in Forex markets are made either by bots or with the help of bots.
How do trading bots work
Trading bots work according to market trends. They collect the data necessary to make a transaction, based on the analysis of the trading platform.
Many trading bots use the so-called exponential moving average (EMA) as a starting point for market analysis. EMA tracks market prices for a set period of time, and a bot can be programmed to respond to what that price does – for example, if it goes beyond certain limits.
By programming bots, traders can set their thresholds depending on the risk they are willing to take. However, one of the drawbacks of EMA is that it is based on a past history, which, as all traders know, does not indicate future results, especially in the cryptocurrency industry, where volatility is extreme.
Pros and Cons of Crypto trading bots
Advantages of trading bots
High speed decision making – even experienced traders need time to analyze the market. Beginners work even slower. As a result, a trader can miss a chance to make a good deal. To avoid such situations, many traders prefer to use bots.
Analysis of an unlimited number of pairs – traders aren’t able to analyze a large number of assets simultaneously and make adequate decisions. They give this work to bots, using only ready-made results from their analysis.
24 hour trading – bots work around the clock. Using bots means giving traders more free time. Many algorithms are configured to fully automate trading from the moment the signal appears to the decision making.
Lack of emotion – humans are subject to various psychological conditions. They can be too excited, may experience fear or become depressed. This can affect trading results. Bots do not experience any emotions and work only in the frameworks of their algorithms.
Disadvantages of trading bots
Patterned action – bots cannot understand when the market situation is changing. A trading bot does not know what to do in case of an emergency. This can lead to costly mistakes.
They have to be monitored by their traders constantly – This is an important minus, which crosses out almost all the advantages. The fact is that a robot can not be left to work independently. If it is written on the basis of an oscillator, then it should be used in a period of horizontal ranges. If a robot is written on the basis of trend indicators, it is better to use it when there is a clear trend in the market.
Crashes and errors – a bot is like your browser, media player, text editor, etc. They can also be bugged and work incorrectly.
The best cryptocurrency trading bots
In this section, we will cover some of the most popular bots that you can use. In most cases, these bots offer more than automated trading.
TradeSanta
TradeSanta is an all-in-one platform to trade crypto like a pro without being one. Since its launch in 2018, TradeSanta has been determined to ensure that its products are available to all — so to date, trading bots can be used across Binance, HitBTC, Huobi Global, Upbit, OKX, Binance US, Coinbase Pro, FTX, Kraken, and Bybit.
TradeSanta offers a plethora of features to help both advanced and novice traders:
- Grid and DCA strategies that work both in spot and in futures markets;
- Demo Trading for testing a strategy against current market conditions without investing real funds;
- Take profit targets: simple or trailing take profit;
- Risk management tools, stop loss, trailing stop loss, and TradingView stop signals;
Outside bots for automated trading, it also offers a terminal and a marketplace with tested and profitable strategies.
Connecting TradeSanta to an exchange via API is a matter of minutes. And during these times of financial uncertainty, TradeSanta’s suite of tools can play a crucial role in helping traders stay one step ahead of the game.
Cryptohopper
Cryptohopper is an automated bot that works non-stop, regardless of whether the computer is turned on or not. It supports most popular exchanges and offers a wide selection of cryptocurrency coins, at the same time you can trade up to 75 pairs.
Manual configuration of the bot is provided for professionals, while it will be interesting for beginners to trade using strategic models based on the recommendations of experienced traders.
3Commas
3Commas is a popular trading bot that works with many exchanges, such as: Bittrex, Bitfinex, Binance, Bitstamp, KuCoin, Poloniex, Gdax and Huobi. The bot works 24/7 with all devices, as it is a web service, so you can monitor your trading panel on mobile as well as your laptop or desktop. The bot lets you set goals for stop loss and take profit and it also allows you to copy the actions of the most successful traders.
Another interesting feature is the ETF-like crypto portfolio function, which allows you to create, analyze and test crypto portfolios, as well as choose from the most effective portfolios created by others.
Haasbot
Haasbot, a cryptocurrency trading program with support for Windows, MacOS and Linux, offers a large number of bots to choose from. Haasbot, unlike cloud bots, must be installed on a PC.
If you know how to program, you have the opportunity to “build” your own bot based on Haasbot scripts that are written in C#. For trading beginners, the Haasbot has a prediction tool that shows trends and gives advice.
CapClub
Cap.Club is a cloud bot for manual and automatic trading 24/7 on Binance, Bittrex and Poloniex. Thanks to the simple interface on the platform, it is convenient for both beginners and experienced traders.
Among its tools of particular interest is its visual strategy editor with flexible settings. This allows you to implement strategies of any complexity and logic without programming skills.
There’s a number of trading tools which are responsible for the effectiveness of the platform:
- Trailing mechanisms for buying and selling
- StopLoss and TakeProfit
- Signals to manage strategies
- Safety orders
To improve trading skills, users can practice on a demo account that simulates trading on a real exchange.
Cryptotrader
CryptoTrader is a cloud trading bot that provides users with fully automated trading solutions without requiring them to install the bot on their own system.
CryptoTrader has a “market” of strategies that allows users to buy their favorite trading strategies or sell strategies developed by them.
Cryptotrader supports most major exchanges, both for testing and for real-time trading, using a testing tool that allows users to see how their strategies will work in different market conditions.
GunBot
Gunbot is a trading cryptocurrency bot that supports a large number of exchanges and which you can use to trade on several platforms at the same time. There are 35 ready-made strategies and a large selection of settings with which you can craft your own strategy.
Zenbot
Zenbot is an open source bot available for major operating systems that can be modified by users. Zenbot was developed using artificial intelligence technology. Therefore, the software can perform high-frequency transactions and has advanced arbitration possibilities.
In addition, the software can simultaneously perform multiple multi-transactions with cryptocurrencies. The trading bot is supported by major cryptocurrency exchanges, including Gemini, Kraken, Poloniex, GDAX, Bittrex and Quadriga.
Zenbot is available for download at https://github.com/DeviaVir/zenbot.
CentoBot
Centobot – this service has been on the market for three years. It comes with an extensive database of indicators and trading pairs. There are both ready-made solutions for various trading styles, and the possibility to create your own bot from a script.
The most popular Centobot service robots:
- Altcoins Combo – trades several altcoins to diversify risks.
- Cryptobot v2.0 – works only with the most famous and expensive crypto coins. The program uses a whole range of trading indicators for analysis.
- Crypto Majors – trades Bitcoin, Ethereum, Ripple. Analyzes the situation based on the technical indicators MACD and CCI.
RevenueBot
RevenueBot is a cloud cryptocurrency bot on popular exchanges using martingale strategy. Using martingale strategies, this bot can successfully work both in a growing market (Long algorithm) and in a falling market (Short algorithm).
In the Long algorithm, the bot first buys the asset in pieces when the price drops, and then sells everything when the price rises.
In the Short algorithm, the bot first sells the asset in pieces when the price rises, and then buys everything sold when the price drops.
The bot takes about 20% from your profit. This is a good solution for traders with a small deposit. The maximum commission is just the equivalent of 50 USD in BTC per month.