The idea of using automated trading systems (ATS) came to the financial world naturally as many tasks performed by traders can be easily automated. Contemporary crypto trading bots are quite efficient, precise, and affordable making automation more accessible to a wide range of users.
Why do we use automation in trading?
Any trade can be broken down into sequential tasks that line up to form a precise algorithm meaning that any workflow related to opening a market position can be automated. Let’s take a look at a simplified version of a trade performed by a retail trader:
- The first step is to analyze the market and identify a good moment to enter.
- When conditions are good, go to the exchange or your broker and start adjusting order parameters.
- Place an order and carefully look at the market situation to close it with a profit.
While each step can be further vivisected, the only important part where a retail trader must think, analyze, and focus is the first one. A typical cryptocurrency trading bot can be used to fully automate every other aspect of a trading operation.
How do crypto trading bots work?
A crypto trading bots are, in essence, a script executed in the cloud. You may use a dedicated machine and run a server, but it is a hassle that has been eliminated from the industry long ago with more and more advanced platforms working as SaaS (Software as a Service) businesses. Finding a really good crypto trading bot for sale is not an issue for a modern retail trader working with cryptocurrencies.
Below is a typical sequence of events that happen when a bot is working:
- Users create conditions for bot activation. It can be a TradingView or a custom-made signal.
- A bot receives a signal and sends instructions to the exchange of your choice.
- An exchange executes orders according to instructions.
- When an order is placed, the sequence starts over.
Retail traders have full control over their automated actions on an exchange allowing them to reduce or increase risks as they see fit. For example, a crypto bot running on the WunderTrading platform can be fine-tuned to ensure that your investments are protected from unexpected events in the market.
Whenever you create a new bot, you will be able to adjust its settings:
- Set the portion of your portfolio that can be accessed by a bot;
- Add stop-loss and take-profit orders to reduce potential risks;
- Choose multipliers for sequential orders if necessary.
While having a strong technical analysis strategy is, arguably, the most important part of running an automated trading system, true mastery shows in risk management and portfolio segmentation. Retail traders who maintain a calculated approach to trading with bots usually outperform those who do not put much effort into learning nuances of automation.
What is the most profitable crypto trading bot?
Veterans and novices easily integrate automation into their investment endeavors. There are many methods, but three general approaches are used more frequently than others:
- Conservative trading using bots is focused on accumulating resources and building a strong portfolio. DCA buying and arbitrage are two primary techniques heavily employed by reserved and calculating traders interested in acquiring assets slowly and creating a risk-resistant portfolio.
- Active retail traders and speculators utilize automation to reduce idle time, potential delays, and human factors from their market activities. You can set up bots that will trade using swing or scalping strategies. Bots are faster and more resilient than humans.
- People looking into opportunities to create a secondary income stream use DCA trading and GRID bots to make money during relative stability in the market. These approaches work best during established trends and can be quite efficient when used correctly.
Most advanced platforms that provide automation services usually offer a wide range of prebuilt solutions that you can plug-n-play into your overall strategy. For example, WunderTrading has a long lineup of preset bots like DCA, GRID, Arbitrage, and more.
However, the future of the botting industry is in customization. Today, you can create a crypto signal bot that uses unique strategies designed specifically for certain assets. For example, the volatility of up-and-coming tokens can be utilized by swing traders using traditional approaches involving RSI (relative strength index) and MFI (money flow index) indicators. They can easily automate these trading strategies and extract even more value from financial markets.
How to use crypto trading bots
You can get started in just a couple of minutes:
- Go to the official website of WunderTrading and create a new account;
- When prompted by the system, link your main exchange using the API link;
- Go to “My bots” and start creating bots using tutorials offered by the platform;
- Create an account with TradingView to use advanced technical analysis strategies.
Setting up bots is the easiest part. More importantly, it is vital to identify where these bots fit in your portfolio. You should only bet some things on a single investment opportunity. Bots are great when you are looking for ways to diversify your investments by implementing something with adjustable risks. They can be excellent in cases when people need to accumulate assets.
Using bots to focus on active trading can be useful, but you need a very good and reliable technical analysis system that generates profit-promising signals regularly. Honoring your analytical skills is critical for achieving success while using bots for active day trading.
What does the future hold for automation?
Futile to deny that bots will be utilized by retail traders more and more as the level of sophistication grows across financial markets. We have efficient technical analysis strategies that use multiple indicators to predict price action. Contemporary bots routinely outperform human traders when decision-making speed and consistency are crucial.
While the technological progress alone can sway many skeptics toward thinking that bots are the future of retail trading, there is an even more important issue to discuss — the price. It is cheaper than ever to have an automated trading system utilizing the freshest and most advanced tech at prices that would be laughed at a decade ago.
You can already try some of the best bots in the market for free. For example, WunderTrading offers a free plan where you can run up to 5 bots simultaneously and use a wide range of specialized features without paying a dime. The economy of scale works wonderfully when it comes to tech companies. With more competition, the market can expect that prices will go down on average while the quality will continue improving!