How to Use Bots for Crypto Trading and Earn Money

MAKE YOUR CRYPTO WORK

It is important to understand how crypto trading bots work in the modern financial world. Learn about how to effectively use crypto trading bots.

Would you allow a robot to vacuum your room? Would you allow it to make a coffee for you? Of course, you would. Most of us will gladly trust a well-written algorithm to perform our tasks better than we could. The modern cryptocurrency news cycle is all about automated crypto trading. Every now and then, a new article will pop out discussing the upsides and downsides of crypto trading using specialized bots.

How to use bots for crypto trading? First and foremost, you must know what they are and why they exist. 

  • Bots are programs that execute input commands when conditions are met. The conditions and commands are defined by either humans or algorithms.
  • Automated trading is a natural answer to the digitalization of the financial market and the overabundance of available information that must be analyzed to make correct decisions.
  • Computers do not sleep, rest, or eat making them perfect traders that never lose focus or succumb to stress and hesitation.

These instruments were developed to assist traders in their work and make good instruments for people who already know what they are doing and how profits are made. If you are not an educated trader, chances are you will lose money using bots that have poor settings or do not perform well without good input.

How to effectively use crypto trading bots

The market is full of products that help you automate the trading process. Some of them are very niche and offer a very specific service:

  • Arbitrage bots search for differences in prices across several exchanges;
  • Grid bots act using a set list of rules defining when to sell and when to buy within a specific price range;
  • DCA bots purchase assets in short intervals to offset potential risks.

Other types of programs exist and they all perform different tasks based on inputs provided to them. Note that automation requires you to specify the market tactic and define it in numbers (when, how much, how long, how fast, etc.) to make bots efficient. 

The rule of thumb here is to not look for products that will automate everything and completely exclude you from the decision-making process. Bots should be used in moderation and manage only a part of your portfolio. Finding the right balance between your personal investment decisions and botting is key to success.

The “How to”: using crypto trading bots

The choice of a bot depends on a variety of factors. Here are some of the basic ones to consider:

  • Which exchanges are you most familiar with?
  • How much money can you dedicate to paying for the bot?
  • Is the potential result better compared to more conservative methods of trading?

Some bots do not have necessary integrations with exchanges. The pricing varies wildly across the market with some options costing $90 per month and some less than $40. Additionally, automated trading bots bring different results to different users. Many products will fit your answers. To narrow down the list, consider the following:

  • Who are the people behind the product? Experienced traders with good history and solid portfolio or managers of huge trading platforms should be a bigger attraction than some nobody.
  • Can you find their algorithm elsewhere? Some companies openly publish their algorithms or otherwise compromise the integrity of the product making it essentially useless.
  • Do they care about you? A good reliable company will stand behind its product offering cashback and discounts during tough times and taking a small share of your profit as a reward.

After choosing a product, talk to their manager and discuss which specific bots will suit your budget, preferences, and portfolio. Integrate them slowly and test them extensively using smaller order sizes.

The main takeaway

A good bot tutorial will always educate you on how crypto trading bots work. However, the main issue is not using it but choosing which one is worth using.

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