The classic stock market has its phases, sleeping and awaking to resume trading. Unlike the traditional financial market, the crypto market never sleeps and trades nonstop. Such an approach can be quite profitable for those who resort to the modern means of replacing themselves with a bot when they go to sleep to let trading continue in an automated mode.
In essence, trading bots are software programs installed as add-ons on financial software interfaces. Acting as automated trading operation facilitators, the trading bots execute strategies and actions that the traders program them to perform. Trading bots can place buy and sell orders based on parameters and algorithms, while more advanced models of bots are capable of conducting in-depth analyses of financial markets to reveal profitable avenues and approaches to strategies.
The bots themselves take action on their own only under strict orders, as traders program them to analyze market volumes, cups, dynamics, and other parameters to act based on a predetermined strategy. The advent of blockchain and cryptocurrency together with AI and neural networks has allowed trading bots to evolve into more advanced constructs capable of relatively “independent thinking” that allows them to take action based on a variety of aggregated datasets.
Cryptocurrency Trading Bots
It did not take programmers long to develop bots capable of monitoring the crypto market and executing strategies. The similarities between the crypto and traditional markets have made the transition even easier.
Like their traditional counterparts, cryptocurrency trading bots act on the basis of data they aggregate from a variety of crypto exchanges. They analyze market parameters and execute the strategies that the traders program them to perform. Cryptocurrency day-trading bots are the most popular type, since day trading still provides the biggest scope of opportunity for making profits on heightened market volatility. Bots to buy and sell Bitcoin are some of the most popular constructs tailored for the market.
The logical question that arises is how to make a cryptocurrency trading bot, and it’s a fairly popular one on the web. However, the answer is not as simple as it would seem. Making a crypto trading bot is the job of traders/programmers qualified enough to make a piece of software capable of coping with vast amounts of financial data. In fact, cryptocurrency trading bots are available from open sources on the web, and there are dozens of template software samples available to tailor any need.
Best Crypto Trading Bots
The internet is awash with crypto trading bot reviews, which include Bitcoin arbitrage bots, day trading bots, specialized crypto coin trading bots, and many others. It is widely recognized that the best crypto trading bot of 2019 is Cryptohopper, followed by 3Commas and Zignaly. None of the three are free, and it is highly recommended that all potential users read reviews independently on each to determine which would best suit their needs.
Free Crypto Trading Bot
In addition to expensive and highly advanced crypto trading bots, there are also free models available to average users. The constructs available range from beginner to advanced in their complexity and user-interface friendliness.
One of the most popular free crypto trading bots and open-source bots available on the internet is Gekko, a beginner-level bot with a simple user interface. Zenbot is an intermediate-level bot with support on many exchanges but with no user interface and command line–based input. Last but not least on the list is Enigma Catalyst, an advanced-level bot with good support services and a rather steep learning curve.
Cryptocurrency Arbitrage Bots
Beyond the average trading bots, there are also arbitrage bots, which are software programs that have features allowing traders to set up a variety of parameters that directly affect the bot's behavior. With such an approach to trading, these bots can enter various exchanges that support them and trade in an autonomous fashion on the trader’s behalf. The main advantage of arbitrage bots is that they can make instantaneous decisions depending on asset price movements to make profits for the trader.
Bitcoin Trading Bots
Since Bitcoin was the first and most popular cryptocurrency to storm the market and, in fact, created it, logically, traders have developed a variety of bots to trade the coin. There is an immense number of bots tailored to trading Bitcoin, including GunBot, Cryptohopper, Zenbot, CryptoTrader, BTCRobot, 3Commas, and many others.
Ethereum Trading Bots
Ethereum is just as popular on the market as a tradable asset, so it is no surprise that a slew of bots have been created to trade Vitalik Buterin’s coin as well. Some of the top bots for trading Ethereum are BTCRobot, HaasOnline, PHPTrader, and many others.
The Main Types of Strategies Used by Bots
Since trading bots largely act as avatars for traders, they execute the strategies that the traders program them to execute. Some of the most popular strategies that bots are used for are the following:
Trading on an exchange is the classic norm under which a bot is programmed to buy or sell assets at predetermined prices by placing buy and sell orders.
Arbitrage is the simultaneous purchase and sale of an asset to make a profit from an imbalance in its price.
Market making is the third-most popular strategy employed by trading bots. Market making is the execution of strategies or sell-side methods designed to capture spreads, otherwise known as the difference in price between buys and sells.
Popular Trading Bots
The most popular trading bots on the market are still CryptoHopper, HaasBot, 3Comma, Zignaly, Gunbot, Zenbot, and Gekko.
The main features that all these bots provide are a variety of programming options, ease of use, convenience of setup, integration with a broad range of exchanges, and good user interfaces. The reason why these bots have become popular is their reliability, customer support, and convenience of use and security, which, combined with their broad functionality, make them the go-to solution in crypto trading.
The main pros of the bots in question lie in their functionality, but there are downsides as well. For instance, GunBot cannot cope well with high market volatility and is therefore not recommended for use under high market-strain conditions. 3Commas is expensive, bearing a price tag of $82 for the pro package, which is a heavy toll for beginners. Cryptohopper is just as expensive, at $99 a month. Meanwhile, Gekko is not considered very user friendly and has a lengthy installation process.
Other Useful Features
Trading bots are not only about trading, as there are some constructs designed as assistants for traders rather than as direct replacements or avatars. There are bots designed as market dynamics analysts and others that act as aggregators of information that provide detailed market charts, while others yet are designed to filter useful information in news backgrounds that can affect asset prices. Bots have been around for far longer than the crypto market itself. In fact, many bank tellers, online shop assistants, and even surveillance systems are actually bots and have been designed to perform specialized features.
The same applies to the crypto market, where the merger of AI and neural networks has given birth to invaluable constructs that help traders and enthusiasts make sense of the market.
There are risks involved with using bots as well. Since the software is imperfect by nature of its automation, limited independence, and lack of critical thinking outside the set parameters, bots should be monitored constantly and are by no means the be-all and end-all for making profits. Bots are more like assistants that can take over for the trader for a limited time and execute mundane tasks. More complex tasks, such as chart analysis, in-depth technical analysis, and decision-making are still the responsibility of human traders.
Given that bots cannot always spot market movements that have been predicted, it is highly advised to use bots with caution and rely on personal involvement in the trading process.
How to Connect a Bot to Xena Exchange
Xena Exchange supports bots and welcomes traders to install their add-ons to start making profits on the crypto market. Xena Pro is one of the few desktop terminals in the entire cryptocurrency market that is absolutely free for everyone. The desktop terminal enables strategy backtesting, built-in calculations, and the easy automation of trading strategies using C# and Visual Studio Code plugins, as well as one-click trading for synthetic instruments. Desktop solutions provide traders with more freedom by allowing bot-writing and strategy backtesting, which enables strategy testing on historical data before backtesting.
Do not delay your stylish grand entry into the crypto market. Join Xena Exchange and start trading with bots like a pro.