Cryptocurrency trading bots explained
Automated trading, or algorithmic trading, allows programs to conduct calculated trades without human interaction. It was developed to take the load off of having to constantly monitor markets. It uses a variety of algorithms and trading strategies implemented by the user. By scanning markets and using the information to determine what to trade and when to trade it, automated trading gets rid of any emotional aspects and relies purely on numbers.
That said, it allows traders to let a system trade on its own while markets are open. But what if the markets, such as cryptocurrency markets, never close? Are traders supposed to leave their computers running 24 hours a day? Trading bots, the equivalent of automated trading in the cryptocurrency world, are frequently being released to take the stress and time out of trading.
There are a variety of bots already on the market designed for both entry-level as well as experienced cryptocurrency traders. There are a few aspects that should be taken into consideration before deciding whether or not a trading bot is right for you, such as price, available exchanges, and whether or not it is cloud-based. Below is a list of trading bots and a description of their unique functions.
Exchanges: Binance, Poloniex, Kraken, Bitfinex, Coinfalcon, Luno
Gekko is the perfect cryptocurrency trading bot for new traders. It allows users to test multiple trading strategies without having to worry about monthly fees. It lets users test their own developed trading strategies on historical market data, which they can then use to determine if their strategies are suited for live trading. However, compared to other bots on this list, Gekko is somewhat limited in terms of what it can be programmed to do.
Prices: $19, $49, or $99 per month
Exchanges: Binance, Bittrex, Poloniex, GDAX, Kraken, Coinbase Pro, Kucoin, Cryptopia, Huobi
Cryptohopper is basically a Gekko 2.0. It allows users access to a wider range of exchanges, has a strategies marketplace, and can be run on the cloud. A strategies marketplace gives Cryptohopper users a platform to either buy or sell trading strategies. It also has a trailing stop-loss feature which prevents a coin from being sold before it fully matures.
Unlike Gekko, however, Cryptohopper requires a monthly subscription, which gives users more options at an increased price. Its most expensive version utilizes arbitrage, which is the process of purchasing cryptocurrencies from an exchange in which they are the cheapest and then selling them on one in which they have a higher value. They also offer a free seven-day trial so you can test it out and see if it’s right for you.
Prices: 0.0043 BTC, 0.006 BTC, 0.0112 BTC, 0.0213 BTC, 0.0532 BTC
Exchanges: Bitfinex, Bitstamp, Poloniex, Coinbase, Kraken, Bittrex, Kcoin, Binance, Huobi
The first thing to note about Cryptotrader is that it can only be paid for with either bitcoin or litecoin. So, if you prefer not to use those cryptocurrencies, you still need to buy some to make the payment.
This bot can be used with most major exchanges, offers a strategies marketplace, is cloud-based and provides backtesting trading strategies, which can be used to test the strategies in different market conditions.
Price: one-time payment of 0.05 BTC, 0.15 BTC, 0.1 BTC
Exchanges: Binance, Bittrex, Poloniex, Bitfinex, Cex.io, GDAX, KuCoin, Kraken, Cryptopia
Although only available through purchase with bitcoin, Gunbot differs from Cryptotrader in that it requires just a one-time payment. Despite the one-time payment, Gunbot is not cloud-based, nor does it offer a strategies marketplace. It is fairly similar to Gekko, with the main difference being that it has access to a wider list of exchanges.
Trading bots do not guarantee returns
Trading bots are only as good as their owners. A more expensive service does not necessarily mean increased profits. If you’re planning on purchasing a trading bot, sitting back, and watching the money roll in, you are gravely mistaken. Trading bots rely on the input of their users. If your trading strategies do not work without a bot, then they most likely will not work with one.
Sure, you could rely on the trading strategies of others, but markets constantly fluctuate and there is no one-size-fits-all strategy. This is why Gekko is at the top of the list. The fact that Gekko is free and still offers a variety of services makes it a valuable tool to both amateur and experienced traders. If the stress of trading is getting to you, you may want to consider a trading bot. Click here to check out our other tips and techniques for successful trading!