Why Should You Prefer Bot Trading
Start writing a post

Humans VS Bots: Why Should You Prefer Bot Trading?

Why should you use Bot Trading

Humans VS Bots: Why Should You Prefer Bot Trading?

Automated trading takes the stress out of trading, saving you the hassle of waiting for the right time to enter or exit the market when you track it manually.

Here we explain how trading bots work ( using TradeSanta bot as an example) to illustrate the advantages of automated trading

Why should you try bot trading?

Which is best, automated or manual trading? Here's how algorithmic trading beats human traders hands down:

1. Bots keep their cool.

It can be hard for traders (as humans) to keep their emotions under control, but a bot will simply execute your strategy without panic or hesitation.

2 Bots savetime.

There's no need to check the market non-stop, as bots can do it for you. Nor do you need to calculate order prices manually — let the bots make it for you.

3. Bots make quick trading decisions

Bots can react immediately to market fluctuations and run orders according to their settings. Whereas it's almost impossible for a human to place hundreds or thousands of orders in a second r (unlike a trading bot).

4. Bots don't sleep.

Unlike the traditional stock market, the cryptocurrency market works 24/7, so if you don't want to miss a trade, you need to be in front of your screen round the clock. Instead of sacrificing your sleep , use trading bots to cover for you.

While bots are excellent at automating your crypto trading routine, remember they're running on your settings — they're not simply passive income generators. The following tips will help you get your settings right for your needs.

3 basic rules to keep in mind when trading with bots

Keep an eye on your bot

Bots need to be managed if you want to make money, so check in regularly with its activity to make sure it's making the most of the current market situation. Track the pairs you trade, analyze charts, and check the cryptocurrency news to avoid losing all your investments.

Cap your risk

Limit your worst-case losses to an allocated amount by creating a separate account on the exchange for your trading bot.

Beware of scams

Familiarize yourself with the bot before you start using it. Check how long it's been on the market and the reviews it's received. This way, you can avoid scams and losing your money.

NEVER trust "black box" bots who promise you income after depositing your crypto into their "smart contract". A real bot will only operate through your own account on a well-known cryptocurrency exchange, so you can see all your bot's trades and orders.Your API keys should NOT allow any bot to make withdrawals from your exchange account — permission to make trades must come from you (via your strategy).

So, what's next? It's time to select the right trading bot for your needs. You can choose from the following:

Trading bots on the market

As the crypto market matures, more platforms providing automated trading bots are becoming available. Here we've classified them according to their key functionality.

Trend trading bots

This bot follows cryptocurrency trends and executes buy or sell orders in response to them. Trend trading bots work on the assumption that a security will continue to move in the same direction it is currently trending. They often contain a take-profit or stop-loss provision to lock in a profit or avoid big losses if a trend reversal occurs.

Check out 3commas, Cryptohopper and TradeSanta for examples of trend trading bots

Arbitrage bots

This bot tracks a coin's price on different exchanges. It buys coins on the exchange with a lower price and sells them almost instantly on an exchange with a higher price — therefore making a profit. Many traders dispute the efficiency of arbitrage bots, but projects like Gekko and Blackbird offer them so you can make up your own mind.

Lending bot

These bots allow you to lend your cryptocurrency in order to make a profit. You can set the rate, volume and duration of borrowing — but do keep an eye on the market to make the most of your interest rates. Poloniex and Bitfinex support lending bots and you can try out automated lending on Coinlend and Cryptolend.

Market-making bot

This bot catches the spread between the buy and sell price. It places buy and sell limit orders near the current price so you can make a profit when the orders are executed. Examples include Haasbot and Scavenger.

Summing up

Cypto Trading bots can save you time, speed up your trading activity and (given the chance) make a profit — so long as you use them mindfully.

Most of all, keep in mind that the bot is not a trader, and it's up to you to decide on strategies, and when and what to trade.

We hope this simple guide will help you to navigate crypto trading automation and make more profit as a result!

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
houses under green sky
Photo by Alev Takil on Unsplash

Small towns certainly have their pros and cons. Many people who grow up in small towns find themselves counting the days until they get to escape their roots and plant new ones in bigger, "better" places. And that's fine. I'd be lying if I said I hadn't thought those same thoughts before too. We all have, but they say it's important to remember where you came from. When I think about where I come from, I can't help having an overwhelming feeling of gratitude for my roots. Being from a small town has taught me so many important lessons that I will carry with me for the rest of my life.

Keep Reading...Show less
​a woman sitting at a table having a coffee

I can't say "thank you" enough to express how grateful I am for you coming into my life. You have made such a huge impact on my life. I would not be the person I am today without you and I know that you will keep inspiring me to become an even better version of myself.

Keep Reading...Show less
Student Life

Waitlisted for a College Class? Here's What to Do!

Dealing with the inevitable realities of college life.

college students waiting in a long line in the hallway

Course registration at college can be a big hassle and is almost never talked about. Classes you want to take fill up before you get a chance to register. You might change your mind about a class you want to take and must struggle to find another class to fit in the same time period. You also have to make sure no classes clash by time. Like I said, it's a big hassle.

This semester, I was waitlisted for two classes. Most people in this situation, especially first years, freak out because they don't know what to do. Here is what you should do when this happens.

Keep Reading...Show less
a man and a woman sitting on the beach in front of the sunset

Whether you met your new love interest online, through mutual friends, or another way entirely, you'll definitely want to know what you're getting into. I mean, really, what's the point in entering a relationship with someone if you don't know whether or not you're compatible on a very basic level?

Consider these 21 questions to ask in the talking stage when getting to know that new guy or girl you just started talking to:

Keep Reading...Show less

Challah vs. Easter Bread: A Delicious Dilemma

Is there really such a difference in Challah bread or Easter Bread?

loaves of challah and easter bread stacked up aside each other, an abundance of food in baskets

Ever since I could remember, it was a treat to receive Easter Bread made by my grandmother. We would only have it once a year and the wait was excruciating. Now that my grandmother has gotten older, she has stopped baking a lot of her recipes that require a lot of hand usage--her traditional Italian baking means no machines. So for the past few years, I have missed enjoying my Easter Bread.

Keep Reading...Show less

Subscribe to Our Newsletter

Facebook Comments