Cryptocurrency is a hot topic, and everyone wants to get in on the action. Whether you’re a seasoned trader or someone who’s just starting, you may be wondering about crypto trading bots. What are they? How do they work? This comprehensive guide gives you an in-depth insight into crypto trading bots.
Let’s get started.
What Is A Crypto Trading Bot?
A crypto trading bot is a computer program that automates cryptocurrencies’ buying and selling process. Crypto trading bots use various indicators to decide when to buy or sell a particular currency.
These indicators include moving averages, support and resistance levels, Bollinger Bands, and MAC. Although you’ll find a range of different crypto trading bots available on the market, the one from KuCoin crypto exchange is the best. It is entirely free to use.
The best part is that KuCoin has no hidden costs or monthly fees for its trade bot. Interestingly, the trading bot from this platform comes with convenient features and designs.
No matter if you’re a bit technically challenged, you’ll still be able to get it up and running in no time. Furthermore, KuCoin’s bot has an excellent track record. It has consistently outperformed the market and has made some users very profitable.
How Do Bots Work?
Bots work by taking your orders and placing them on the exchange. They then constantly monitor the market for you, day and night, and make decisions based on your criteria. For example, if you want to buy Bitcoin when the price drops below $8000, a bot will automatically place an order.
There are two main types of bots: those that trade on your behalf and those that provide you with information. Trading bots place orders on your behalf. They can either be used to automate simple trades or complex strategies that require a human touch.
On the other hand, information bots give you data about the market. This can include prices and order book depth to social media sentiment and news headlines.
Benefits of Crypto Trading Bots
One of the main benefits of trading bots is that they are emotionless. This means they can trade without emotions, which can sometimes lead to bad decision-making when humans are trading.
This is because humans tend to get emotional when trading, which can sometimes lead to them making decisions based on their emotions rather than on logic.
2. They can trade 24/7
Unlike humans, who need to sleep and take breaks, crypto trading bots can trade around the clock. This means they can take advantage of opportunities in the market even when humans cannot trade.
3. More Powerful
You can use bots connected to exchanges if you want something more powerful. These will be able to trade for you automatically and generally have many more features than the free ones.
They come at a cost, though – they’re usually subscription-based, so you’ll need to pay monthly or weekly to keep using them.
One of the most prominent benefits of using a crypto bot is timing. The best crypto trading software takes only a few seconds to execute trades.
This turns out to be more beneficial when the volatility becomes too high. Automatic execution of the crypto trade becomes essential when you plan on benefitting from the price differences by unique brokers.
5. Highly Efficient
As you may know, smaller trades are crucial in the cryptocurrency market. Thus, trading bots will be a good decision, especially for smaller trades, as these bots ensure efficient trading.
If you trade multiple cryptocurrencies at the same time, efficiency becomes essential. From keeping track of everything to opening and closing trades at the right price and time, the crypto trade bots take care of all.
The Bottom Line
Crypto trading bots are a tool, and like any tool, they have pros and cons. If you’re thinking about using one, it’s essential to understand how they work and the potential risks.
With that said, crypto trading bots can be a valuable addition to your trading arsenal, providing you with another way to make profits and helping you to stay disciplined in your trading.