What are the benefits of an automated cryptocurrency trading bot?

Jamiee Lucas

Jamiee Lucas

Jamie Lucas is the Crypto Writer at Maticz Technologies, tangling through the blockchain and crypto forecasts and research. Jamie Lucas aims is to provide crypto guidance to the young enthusiast through my content.

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Every startup and entrepreneur is rushing to become a crypto trader, and the plans to create a cryptocurrency bot start to sound very sensible. In this article, we will discuss how to build a crypto trading bot and avoid all the major pitfalls of this technique.

Read on to find out the steps and best practices to build a successful automated crypto bot software for trading.

 

Crypto Trading Bot – Overview

It is no secret that most of the trades in the stock market are performed automatically. The Crypto market just follows suit. As you know, the bullish season of 2021, enticed many crypto newbies. They think, they are late to the game and jump to any means to promise a more rapid wealth generation.

And even though bots for trading cryptocurrencies. That is more about diligence. Many newbie traders see them as the source of mad gains, while smart traders desire to get some of their life back. Hence, the increasing popularity of trading crypto bots.

 

Types of Crypto Trading Bots

If you were to choose a robot for crypto trading right now, you might be overwhelmed by available choices. The most often quoted types of trading bots include:

 

Arbitrage Bots

It creates money for consumers trading across multiple exchanges, taking advantage of price disparities.

 

Trend Following Bots

It depends on the quantitative technical analysis of indicators for choosing when to buy & sell (including GRID & DCA bots), playing on market variations.

 

Portfolio automation

These Robots handle a typical percentage of coins in the portfolio. For instance: 50% – Bitcoin & 50% – Altcoin.

If we dive deep into the topic, we’ll notice the types of crypto trading bots:

  • Multiple/single-pair trading bots
  • Bots working with Centralized & Decentralized
  • Open-Source & Fully custom robots
  • AI/Simple Algorithmic-driven Bots

 

What are the benefits of trading bots?

Bots Never Asleep

Cryptocurrency bots run day & night even on holidays also – A Toll order for diligent traders.

 

Doesn’t trade on desire

Emotions don’t affect the bot while trading. So that, it doesn’t affect sudden losses or profits so common for humans.

 

Automated Trading is more rapid

Think of all the data sources software can consume concurrently at a steady pace compared to human capabilities. Now add to the equation cheap and robust computing power. And the fact that bots do not require to play with a user interface to perform trades.

 

Backtests and Paper Trading

It allows quick simulations unachievable in manual trading conditions. As a result, bots enter the real market with optimal, proven trading techniques. After all, having an army of self-sustaining crypto traders, raking in passive revenue day and night, and never asking for any recompense, must feel excellent, Right?

 

Different Crypto Bots Tactics

We also require to cover trading techniques as we plan to create a crypto trading bot. What are the most specific trading tactics found in automated trading?

 

Trend Following

This technique indicates identifying an asset’s direction and entering long or short positions relying on whether its price is trending volatile 24hrs/day. Crypto buying typically means ensuring long positions and selling – short ones.

 

Arbitrage

An Arbitrage Crypto trading bot exploits the asset’s price discrepancy across multiple crypto exchanges. Buying at lower & selling at higher prices seem like a no-brainer. However, there is more to it. For eg., we require to take into account the fees. Particularly, if we deal with Decentralized exchanges on various networks.

 

Market Making

This strategy involves making a fast profit by reselling an asset with a slightly fluctuating price. It’s a specific approach for scalping bots looking for quick and relatively small gains.

 

Must-have features in Cryptocurrency Trading Bot

You can’t make a crypto trading bot and expect any real traction without involving these must-have features.

 

Connecting Crypto Exchange Accounts

Consumers need a way to provide APIs from their exchange accounts. Each API is individual for every user and every crypto exchange. It defines a long series of random characters. QR codes seem to be an adequate solution for adding this option.

 

Dashboard

How does the user assess a trading Bot’s performance? Obviously, by reviewing their balance and profit dynamics in a dashboard. We can also include here crypto prices and other relevant information. For eg., Trending news.

 

Trading Rules

It is impossible to develop a bitcoin trading bot and not provide the user with some levers to create its behavior. Every single autonomous cryptocurrency trading tool of the dozen.

 

Schedule

Users will enjoy a chance to turn off the bot during preset breaks. For Example – When huge market moves are anticipated, due to new legislation or when they can’t check in now and then.

 

Transaction History

Being able to review the list of all trades and they are out of comfort to users. They can check on completed trades, and see if renders a certain level of user comfort.

 

Paper Trading

Allowing customers to simulate trades in a live environment is priceless as they can get a conviction from their crypto bot’s performance without risking any capital.

 

Backtesting

This feature is crucial as it secures the bot works as planned, using the historical data for completing test trades.

 

Notifications

It is a must-have feature for any current application. Users need to get updates about primary trading events to keep track of their crypto bots.

 

Security

Face & Touch ID are the minimal security options we should anticipate in the application, and two-factor authentication is a must for web-based solutions.

 

Trading signals

Advanced Crypto trading bots may render a set of trading signals that should be taken into account by the bot while trading.

 

Marketplace

To create a Crypto trading bot development platform with truly high potential, we may also want to include a marketplace of bot templates with different trading techniques. That way, both position, and speculative traders will have a lot of options.

 

How Does a Crypto Trading Bot Earn Money?

The perfect scenario is to provide a couple of subscription levels, with the price rising towards more assertive trading. Other approaches, noticed contain taking a small percentage of recognized profit or partnerships with select exchanges to share earnings from each performed trade.

Needless to say, advertising and a fixed price wouldn’t be the best monetization options for a trading bot. Advertisements will eradicate the entire user experience, and the fixed-price approach would cause issues with upgrades.

 

How much does it cost to develop an effective Crypto trading bot?

Developing a Crypto trading bot needs a sizable budget of approximately $5-7K. Based on your requirements, and choice of devices that support cutting-edge features, the cost will differ. However, the budget of $5K should assist you to get the MVP version out of the door.

If you eagerly want to create a crypto trading bot, then hire the best Crypto trading bot development company that meets your business requirements.

Article reflects author's own opinion.

In any circumstances can CCG be responsible for potential losses regarding investments or services, either referenced by the author in the article or by any links provided.

This platform is intended to share educational knowledge, open for several external author's and in no way represents any financial advisement.

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