Trading bots are little pieces of software that will execute trades on an exchange on behalf of the trader. I remember looking at Fintech LTD test results the other day and wondering how it was possible for something thatís practically mindless to achieve such great results.
These things have been used before in regular financial markets by large hedge funds to trade equities, commodities and currencies. However, the use of such bots by the regular everyday investor first began in the foreign exchange (forex) industry. In time, they have also made their way into the cryptosphere.
What Crypto Trading Bots Are Out There?
There are dozens of them, to be honest, and they all have something to offer. You can get some of them for free and immediately try your hand at automated trading, or you can go for the paid ones, which usually work on subscription models. However, even the very best of them arenít all the same. They come with different profitability, usability and qualities. Weíre going to take a look at some of the most popular ones.
This bitcoin (BTC) trading bot is both free and open source. It can be downloaded by GitHub easily. With the Gekko trading bot, you can execute some of the most basic strategies in the trading world. The bot essentially takes price data from the exchanges, uses that price data to calculate a range of indicators, executes orders on behalf of the trade and has a built-in simulator upon which it can use historical market data to test various trading strategies, something known as backtesting.
Admittedly, the functionality of this trading bot is somewhat limited when you compare it to some of the other trading bots on this list. However, it is a good place to start for beginners as it has stripped all the extra stuff and left only the bare necessities. If youíre just starting out and want somewhere to test your different trading strategies, then Gekko should be a good idea for you.
This trading bot is cloud-based and works 24/7. That means you donít have to keep your computer on for the bot to work. It is very good for experienced traders because they can make manually configure their trades based on a whole host of indicators. It also has some signalers, which are ideal for beginners who want something that works on autopilot easily.
You can backtest on the Cryptohopper trading bot, use trailing stops, trade across multiple exchanges and many other advantages. You can also use it for free in the first month and then start paying subscription thereafter. The cheapest plan costs only $19 while the most expensive one costs $99.
HaasBot is one of those trading bots that just about everyone in the cryptosphere knows about. It can recognize candlestick chart patterns and can combine these with trading signals from other patterns and indicators to allow the trader to come up with some pretty sophisticated trading strategies. HaasBot is also supported by just about every major exchange out there, making interoperability a breeze.
With HaasBot, you can use arbitraging strategies to take advantage of market inefficiencies across different exchanges easily. You can also protect your balance with the help of stops, among many other features. HaasBot is licensed, with prices ranging from 0.035 BTC to 0.084 BTC, which offers you a license for three months. Admittedly, HaasBot is one of the more expensive trading bots on this list and is recommended for the more experienced traders. However, it is worth every Satoshi.
CryptoTrader is cloud-based and has the major advantage of allowing users to create their own custom crypto trading bots. The bots are then hosted on the CryptoTrader platform. This software is compatible with a wide range of currencies and exchanges and allows traders to backtest their strategies. It also has a marketplace where you can trade in strategies, with some users allowing others to have access to the trading strategies they have developed for a fee.
The platform is subscription-based, and the monthly subscription ranges from 0.0013 BTC to 0.016 BTC. You can also pay the subscription fee in litecoin.
This crypto trading bot is fully open source. You can download it from GitHub. It is free, and anyone is allowed to modify the code on the bot to suit their trading style better. The bot is compatible with a wide range of assets and uses technical analysis as its basis for formulating strategies. It also supports high-frequency trading, backtesting and simulated trading or paper trading for traders to test their latest strategies using real-time market data.
ZenBot is a good option and can aid the more experienced traders who want to build something of their own that is capable of trading in their exact preferred style. However, the original developers still warn users not to use the bot with large amounts of money as there have been reports of losses by some users.
GunBot has many different features and setting that help both the beginners and the seasoned pros to make profits on the markets using automated trading. This trading bot is compatible with a wide range of exchanges, including Gdax, Poloniex, Kraken, Bitfinex, Cryptopia, CEX.io, Binance and Bittrex. †
Beware the Risks
Remember that trading using bots involves giving your money to a third party, which can have its own set of disadvantages. It doesnít matter whether youíre giving that money to a seasoned fund manager or trading bot. The fact is that youíre taking a risk. To make things even more interesting, trading bots are relatively young in the cryptosphere, and the cryptocurrency markets are very volatile.
You face a range of potential pitfalls that you must do your best to avoid if youíre going to enjoy crypto trading bots. These include software not functioning as expected, scams and flash crashes, among others.
You should also remember that trading bots are tools, not little workers that generate a passive income for you while you do nothing yourself. Your trading bot is ultimately only as good as the strategy you feed it with. You should, therefore, take the time to hone your trading skills before you can introduce a trading bot into the picture. Ultimately, however, as long as you use them well, these little creatures can make you a tidy fortune.