Most of the trading that happens in the global financial markets today is automated in nature, and things are no different when it comes to crypto markets. The fact that cryptocurrency trading never sleeps is all the more reason for traders to use crypto trading bots, as such tools can enable them to stay in control of their trades at all times of the day.
We’ll look at multiple aspects in this article, including what a cryptocurrency trading bot is, key considerations while picking one and the best crypto trading bots in 2021.
Our List of the Top Crypto Trading Bots
Considering the vast variety of crypto and Bitcoin trading bots available in the market today, it can be very difficult to decide which ones deliver in all aspects. This guide will help to shortlist some of the best crypto trading bots in business today, along with their benefits and features.
What Is a Crypto Trading Bot?
A crypto trading bot can be termed as a software programme which employs an API to automatically execute trades on your behalf, based on how it interprets the market data. It is designed to execute a trade whenever the prevailing market conditions meet certain pre-programmed and predefined criteria.
A crypto trading bot is capable of interpreting and combining conventional market signals like orders, volume and price with technical signals and other significant factors like social media sentiments, to potentially execute profitable trades. However, the robot can also be programmed to align with your personal preferences and strategies. The main idea is to take emotions out of the equation, increase profits, and reduce risks and losses.
How Do Crypto Trading Bots Work?
Crypto trading bots place orders to buy or sell on the client’s behalf. They work in multiple ways including via OS clients, browser plug-ins, software integrated into a crypto exchange and trading servers. Trading can be done by following the below-mentioned steps:
Regardless of whether you are using a downloadable or a platform-based crypto trading bot, you will need to register with the service and create an account first. To do this, you may need to provide your basic personal details such as name, country, email ID and phone number. Registration may be free or cost you some money. In most cases, you’d be able to use the bot instantly after verification and account confirmation.
This step will involve depositing an initial working capital to start trading with the bot. There may be a certain minimum deposit required depending upon the bot you’re using. This deposit will go directly into your trading account and can normally be used right away for trading purposes. The payment methods usually available are flexible, ranging from crypto deposits, credit card payments to conventional bank deposits.
Once the funds show up in your trading account, you may or may not be able to start trading right away depending upon the KYC measures taken by the service provider. Some of these services might ask you to upload a copy of a government-issued ID and address proof before allowing you to trade. The review and verification normally take less than an hour. Once you’re all set to trade, you can set up your trading preferences, instructions, withdrawal-preferences etc. to start trading.
Are Crypto Trading Bots Legal?
Using a tool like a cryptocurrency trading bot for trading cryptocurrencies is considered completely legal in most jurisdictions. However, while the trading bot works like a driver for your trades, you are still considered responsible for its activity. Hence, using any kind of pump-and-dump bot is strictly against the rules. In this regard, please remember that any activity which can be considered illegal in standard trading circumstances will be considered illegal in the domain of crypto trading too.
In order to pick a legitimate crypto bot, you should check if it’s affiliated with one or more regulated brokers. The trading platform should ideally have been approved/certified by bodies like CySEC (Cyprus Securities and Exchange Commission), Australian SIC (Australian Securities and Investments Commission), FCA (Financial Conduct Authority) etc. Having been featured regularly on well-known media platforms as well as crypto-related forums is also a good indicator of legitimacy.
Are Crypto Trading Bots Profitable?
Please be aware, crypto trading bots are nothing more than software programmes. Hence, even though they are reportedly used regularly by a great multitude of crypto traders, there are no guarantees of profit. There are also multiple risks associated with such bots and automated trading platforms. It’s important to keep in mind that these tools are geared more towards traders and not investors. However, you can still make them work really well for you and potentially generate a passive income if you know how to configure them well, to make the most of trading opportunities.
Key Things to Consider When Choosing the Best Crypto Trading Bots
When it comes to choosing the right crypto and Bitcoin trading bot for your needs, there are certain features that are available in all the good ones available in the market today. Some of the important considerations you should keep in mind are:
- Security - Considering the trading volumes they are engaged in, hackers are always trying to target trading bots. Therefore, select a trading bot that is backed by a legitimate and credible team known for its security measures.
- Reliability - The reliability of a cryptocurrency trading bot is very critical to its profit-making ability. It should enable you to continue trading 24/7. You must check independent reviews and ensure that the bot doesn’t suffer from frequent glitches.
- Backtesting - You should be able to instantly verify its trading strategies against historical market data, in order to successfully gauge how well it’ll perform under live market conditions.
- Ease of usage – Most traders, irrespective of how seasoned they may be, prefer bots that have an intuitive interface, suiting their expertise level. In essence, it should fall in line with your trading strategy and the customisation level you require.
- Price – While some crypto trading bots can be used free-of-cost, others can have a significant price tag attached to them. It is generally observed that a paid-for bot provides better service and superior features. Having said that, you must always ensure that you are getting the complete worth of your investment.
- Customer support – Another important consideration is the customer support accompanying the trading bot. You should check how its updates are rolled-out and if bugs are resolved in a timely and efficient way. Ideally, the tool should also come with its training modules and videos to help the new users.
Pros and Cons of Using Crypto Trading Bots
With the cumulative market cap of cryptocurrencies breaking the $1 trillion barrier in the first week of 2021 itself, it wouldn't be wrong to state that it might be a very fruitful year for the crypto traders. Crypto and Bitcoin trading bots are expected to play a very important role in making that happen. Keeping their significance in mind, we shared with you the list of the best crypto trading bots in 2021 and threw light on some basics like what a crypto trading bot means, how it works and other aspects.
Frequently Asked Questions
Normally, all popular fiat currencies like USD, GBP, EUR, JPY, AUD, CAD etc. are supported on most platforms.
Yes, there are many bots which are capable of working on multiple trading platforms.
There may or may not be a cost attached depending upon the bot you plan to use.
While some crypto trading bots are very user-friendly and geared towards starting-out traders, others can be incredibly complicated.
Yes, many crypto trading bots allow for manual adjustments.
Yes, there is a possibility of incurring losses while using such bots. However, you can minimise your losses by configuring them the right way.
Yes, some bots offer mobile apps. However, this may entirely depend upon the specific tool you’re planning to use.
Yes, the good crypto trading bots, like the ones listed earlier in this article, are fully secure in nature.