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Are Crypto Trading Bots Actually Efficient? What is a Trading Bot?

11/27/2018
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  • Bitcoin Trading
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With the emergence of numerous digital currencies, the crypto world is rapidly evolving since most people are now embracing the technology. The new entrants in the market are the crypto trading bots. Everything new is risky until you come to grips with the new technology; thus, it is important to have a clear understanding of what a trading bot is.

Trade bots are computer applications that automatically perform online trading on behalf of a user by using predefined factors programmed by the developer, or, as is often the case these days, the user. The programmed elements allow applications to predict and observe trends to determine when to purchase or sell assets on behalf of the user to make a profit.

While trading bots have been in the online asset trading markets for a long time, they recently crept into the cryptocurrency scene with the emergence of speculative trading. The crypto bot has increased its publicity and preference in the recent past and thus forms a perfect place to start understanding the industry.

Introduction to a Crypto Bot

The cryptocurrency market is highly fluid. For the speculative trader, the need to make profit requires the precise focusing of the trends and movement of the currency in order to buy when there is a decrease and sell when there is an increase. This is where the crypto bot comes in. The crypto bot, in the simplest form, is an artificial intelligence system, in that it uses programmed parameters to make decisions about cryptocurrencies. It is, therefore, simply, a specialized trading bot that concentrates on crypto.

Specifics of Crypto Bot Trading

By now you have understood crypto bots; the use of crypto bots to transact and conduct exchanges is known as crypto bot trading, which is essentially trading by using crypto bots. Simple enough? There are crypto trading markets that allow and often support the use of crypto bots connected to the market and performing exchanges on behalf of the user. In this case, the application is uploaded directly to the cloud from where they trade.

Bots range from free software and single-purchase applications to subscription-packed software. While the function is generally the same, their efficiency is dependent on the nature of the application. Efficiency relies on speed and reduced control. As such, the higher the trading speeds of the trading bot, the more efficient it is. Similarly, the longer the period and the more accurate the prediction is, the higher the efficiency. However, a crucial disclaimer is that as a user, you should rely on the auto trading bots at your own risk. This means that efficiency attained by advancement in technology does not eliminate the risks.

Trade with Bots

One thing that comes to mind when discussing trade bots is that these are a range of technological tools supposed to increase the traders’ efficiency. The user is the trader; the bot is the tool. Thus, not to put his/her assets at risk, the user should have some knowledge of trading. This would allow them to adjust the programmed factors in the crypto trading bots as time goes by. The purpose of the adjustment is to fix glitches and align the trade bots to the changing market dynamics.

So, how do you trade with bots? As with all asset exchange transactions, the general point is that you have to give the trader his assets, and the trader exchanges on your behalf to achieve a given profit objective. Similarly, to trade with bots, you as the user need to entrust the bot with funds and instructions to execute a trade for their benefit.

The cryptotrader bot is usually connected to the cloud, and further to different cryptocurrency markets. The user issues instructions, either in the form of bot settings, for general bots, or programmed parameters, for user-developed bots. The bots then use these instructions to transact on behalf of the user.

The absence of direct user control bears a degree of risk. Given that efficiency is the focus here, we highlight briefly on risks encountered when one trades with bots.

The main risks are scams, faulty software, and crashes. Scams are more prevalent with general and subscription-based bots. Faulty software and crashes occur from both subscription-based and user-developed applications. The risk in all instances is that the user would lose their funds. Scams may be avoided by doing intensive due diligence and research on the bots before purchasing a subscription. As for the faulty software and crashes, continuous development, and backtesting would help in reducing the level of risk, but with all technologies, they are unavoidable.

Cryptotrade Bot

One way of minimizing the currency exchange risk controls. The user needs to maintain strict control of transactions and the process of trading. And what better way may there be other than having your own trading bot?

The cryptotrade bots are applications hosted by the cryptotrader cloud system by renting servers on behalf of users. The system does not require installations but rather relies on normal sign-up and login processes common with subscription-based bots. In addition, they allow the user to connect their crypto trading bots with other major Bitcoin exchanges and cryptocurrency exchange markets. This allows for increased fluidity and higher prediction accuracy of market trends.

In addition, back testing and market strategies testing are the key features of the system. These allow users to test the functions of their parameters as well as their trading strategies in pseudo markets. Backtesting increases software efficiency while reducing risk. Cryptotrader bots, therefore, offer a unique feature of reduced risk and increased efficiency, while still relinquishing control to the user.

Bitcoin Bot

The choice of a bitcoin bot is dependent on the level of the user’s expertise, as well as the intended uses. Similar to all other software applications, the range of available BTC bots has been on the increase over the years. Selecting the one that suits your need is the trick.

What are Bitcoin bots? In simple words, auto trading bots specialize in bitcoin trade; they are trading bot adjusted to bitcoin exchanges and markets. Their role is to help a trader to conduct bitcoin trading in the most efficient manner. Like cryptocurrency bots, they are dependent on both user input and market dynamics. The user input controls how the bitcoin trading bots make decisions; the market dynamics determine the information that the BTC trading bots and users receive.

Bitcoin Trading Bots

There are many bitcoin trading bots available in the market, among which are:

  • CryptoHopper;
  • ProfitTrailer;
  • GunBot;
  • 3Commas;
  • Autoview;
  • Haasbot;
  • Cryptotrader.

Each of these is designed to offer you the tools required by both novice and expert level traders, as well as long-term and day traders to maximize income from bitcoin trading.

Of the seven named bots, the most sophisticated one is Haasbot, while the easiest, or rather most convenient, from a personal perspective, is 3Commas. The CryptoHopper trade bots can be fully customized to the needs and preferences of the user. The choice of a BTC bot is often relegated to the user; however, it is advisable that the level of expertise should coincide with the ability to customize the bot’s actions and its sophistication. This is because the targeted efficiency would be lost if you are unable actually to operate the bot.

Bitcoin Trading

Having acquired the bitcoin trading bots of choice, you may start the actual trading process. Remember, the objective is profit maximization at the most efficient means.

In general terms, bitcoins are peer-to-peer currencies which rely on the acceptability of use for currency appreciation. Bitcoin trading, respectively, is the exchange of one or several units of the virtual currency for another currency. The objective of trade is to purchase bitcoins at lower values, with the speculation that the value will increase in the near future and these shall then be sold. The process of selling and buying is through an exchange process.

The use of BTC trading bots and auto trading bot emerged from the need to increase the efficiency of speculation and transaction processes. Manually, the seller would send the buyer the bitcoins to their bitcoin address or wallet. Automatically, through the use of bots, the trading bots would handle all transactions on behalf of the trader.

As a final disclaimer and reminder, bitcoin trading bots and other crypto trading bots are simply tools. The input of the trader is the most crucial in ensuring that the required efficiency levels are attained.

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