- Can you automate Crypto Trading?
- Are Bots good for Crypto Trading?
- Can I use a bot to buy and sell crypto?
Automating your income stream is the best way to make big bucks and build long-term wealth. This post is all about how you can automate your Crypto Trading and make money while you sleep.
Trading is a skill that is hard to master and takes a few good years to develop. Therefore, to be a successful trader, one needs to devote substantial time to the skill.
Further, you need to keep track of the markets at all times. Additionally, to add more stress, the Crypto market is open 24*7. This means that a lot can happen when we are away, taking breaks, or sleeping.
So, we started looking for alternative methods to encash all the trading opportunities available in the market. Finally, something clicked.
Automated Crypto Trading!
How about giving our trading strategy to a Crypto Trading Bot? The bot can execute all the transactions as instructed. Our proxy (crypto bot) would trade for us 24/7. Thus, making maximum money possible.
It is like a gem found in a haystack. And that’s what we want to share with you as well. So, let’s get started.
What is Automated Crypto Trading?
Automating your crypto trades with the help of an Algorithm or Bot can be termed Automated Crypto Trading. The bot would run 24/7 and execute the transactions on your behalf.
For Automated Crypto Trading, you can either build your own strategy or, if you are a complete beginner, the platform also gives you its own strategies that have worked in the past.
With the help of automation, you can encash all the possible opportunities in the market, keep your emotions out of your trading process, and, most importantly, Make Money While You Sleep.
And the best part is that most bot trading platforms are Free to Use. There is no cost other than the typical transaction cost.
Types of Automated Crypto Trading Bots Platforms
You can run your Crypto Bots on many different platforms. Primarily these platforms can be classified as Centralized and Decentralized.
1. Exchange Bot Trading Platforms
Several Centralized Exchanges have a Bot Trading feature. However, the issue is that these platforms have complete custody of your crypto funds.
In this case, you need to trust the platform’s security and integrity. If there is an exploit on the platform, you may lose all your funds. Further, most centralized platforms (except Pionex) have limited Bot Trading Strategies.
Binance and Pionex are some of the top centralized platforms with a Trading Bot feature.
2. Independent Bot Trading Platforms using Exchange API
Independent Bot Trading platforms do not have custody of your funds. They just give trading instructions to your existing crypto exchange account. However, you are still using a centralized exchange which has its own risk.
This is done by using the API (Application Programming Interface) key of the crypto exchange on which you have your crypto funds.
Generally, these platforms have more trading strategies and features that you can explore to master your bots. However, these platforms are also not risk-free. Because they have access to your exchange’s API, any exploit through that API can lead to a loss of funds.
3Commas and Bitsgap are a few of the top Decentralized Bot Trading Platforms.
3. Smart Contracts based Bot Trading Platforms
This is, so far, the most decentralized option of bot trading. However, this is not beginner’s friendly.
A smart contract is created to deposit your crypto assets and set algorithmic instructions. This smart contract would place buy and sell orders on your behalf.
However, smart contracts are also prone to exploitation. Therefore, you need to ensure that the smart contract you are using is safe and resistant to exploits.
You can explore the top Automated Crypto Trading platform here:
Types of Automated Crypto Trading Strategies
There are unlimited trading strategies that can be used for Automated Crypto Trading. However, the following are the most popular and beginner-friendly strategies one can use:
1. Grid Trading Bot
Grid Bot Trading is a method through which you can automate your Scalp Trading Strategies. These bots utilize the volatility of a crypto token to scalp trade in an automated way.
The best time to start a Grid Bot is the last phase of the Bear Market when the trend reverses and the market is set to go higher.
In the case of a Grid Bot, a price range is pre-decided. For example, suppose for BTC (Bitcoin) token, you set a price range of $27000 to $37,000. This range will be further divided into grids. Let’s assume we decide to create 10 Grids. So, the grids would look something as follows:
|Grid No.||Grid Price Range ($)|
|1||27,000 – 28,000|
|2||28,000 – 29,000|
|3||29,000 – 30,000|
|4||30,000 – 31,000|
|5||31,000 – 32,000|
|6||32,000 – 33,000|
|7||33,000 – 34,000|
|8||34,000 – 35,000|
|9||35,000 – 36,000|
|10||36,000 – 37,000|
Till the time price of BTC remains in these Grid ranges, you will be making money. The Grid bot will keep buying and selling within these ranges. As per our experience, with some practice and guidance, a trader can earn 0.5% – 1% per day (180% – 360% annually) through a Grid Bot.
For more information on these bots, you can refer to our earlier guides:
Further, once you get the hang of how grid bots work, you can check out our Grid Bot Trading Course on CoinSutra VIP. The Course allows you to learn the specifics of a grid bot and what settings would enable you to make money. Further, you also get access to our VIP community.
2. DCA Trading Bot
DCA, a.k.a. Dollar Cost Averaging, is a strategy where you buy a crypto token in small amounts over a period of time. Let’s say you want to invest $100,000 in BTC. Then you have the option to either invest this $100,000 in one single transaction (a.k.a. lumpsum investment), or invest $1,000 in 100 transactions in the next 100 days.
This method of piecemeal is called Dollar Cost Averaging. DCA primarily helps an investor or trading in 2 ways:
- It reduces the impact of price volatility as an investor can average out their cost.
- It brings discipline to your investment or trading process.
Some bots can further automate a DCA strategy for you. This means that you don’t need to process those 100 transactions manually. The bot will do that for you.
You can refer to our List of Best Crypto DCA Bots in the market. Further, you can read our step-by-step Binance Auto-Invest guide to do DCA automatically on Binance.
Pros and Cons of Automated Crypto Trading
Automated Crypto Trading has following Pros and Cons:
1. Benefits of Automated Crypto Trading
Following are the benefits of Automated Crypto Trading:
a. Saves Time
Bot trading saves an ample amount of time. You don’t need to sit in front of the screen and wait for the right time to buy or sell. The bot will do it for you automatically.
b. Beginners can also trade
Generally, for manual trading, you need to devise your own strategy. However, many bot trading platforms also provide you with a pre-devised strategy that is very handy for beginners.
c. Builds discipline – keeps emotion out of the equation
Bot trading is an excellent method for emotionless trading. It simply follows a strategy. This keeps your trading process objective and avoids the havoc of FOMO (Fear of Missing Out) trading.
d. Encash all possible opportunities
Because a bot runs 24/7, you can encash all the possible trading opportunities. This gives this strategy an edge over the manual trading process, which requires each order to be placed manually.
e. Faster than human
Bots are much faster than humans. Therefore, it is an excellent way to beat manual traders in the market.
However, Automated Crypto Trading has a few limitations as well.
2. Limitations of Automated Crypto Trading
The limitations of Automated Crypto Trading are as follows:
a. No guarantee of beating the market
Automated Crypto Trading is a tool that you can use for automation. It only brings convenience to your trading process. However, it does not guarantee any positive results.
b. API issues
The platforms you use for Automated Crypto Trading may have server or connection issues. This can lead to the order being unprocessed. Thus, there is a possibility of missing market opportunities.
Conclusion – Guide to Automated Crypto Trading
Automated Crypto Trading is a phenomenal method of honing your trading skills and making money while you sleep.
We hope this post helped you crack Automated Crypto Trading. In case you have any feedback or comments, then let us know.
Have you ever explored any Bot Trading Platform? How was your experience? Let us know in the comments section.
Please note that nothing written in this post is a financial advise. Please consult your financial advisor before making any financial decision.
Kalki is a seasoned content writer with over two years of experience writing about blockchain and Cryptocurrencies. His passion for Bitcoin and cryptocurrencies bloomed in late 2019. Crypto’s technological and economic implications are what interest him most.
He is a Chartered Accountant and Lawyer with over 10 years of experience in the FinTech industry. He likes to read, travel and go for long rides on his bullet bike.