Cryptocurrency trading is only increasing in popularity over time, as cryptos have become amazingly attractive assets to traders in spite of their volatile nature.
Traders find it challenging to manage positions manually and learn the secrets of trading on their own. The process is overwhelming for most individuals, as it soon might transform into a full-time job. Therefore, the demand for crypto trading bots has increased as well. This automated software provides more successful trades in a short period.
The following guide will introduce you to the topic of choosing the best crypto trading bots in 2022.
Factors to consider
Cryptocurrency traders are spoilt for choice in terms of choosing the best automated crypto trading platform. All bots strive to streamline the entire process of trading and help individuals make the most of their prospects. There are various aspects for investors to take into account when selecting the best bot for their crypto portfolio strategy. Each aspect will be discussed separately to make sure you choose the most reliable service.
Credibility is an essential factor to consider when looking for such software. Detailed research on software programs should be conducted instead of settling for the first bot that comes along. Traders should analyze the reputation of software programs in the industry, as well as check the opinion of the cryptocurrency trading community. The satisfaction of community members speaks volumes about the reliability, trustworthiness, and effectiveness of automated programs.
Regarding credibility, traders are also advised to consider the experience and participation of the developer in the industry. Since purchasing such software can be rather costly, the company in charge of creating it should provide the necessary support and updates to clients.
Another factor to consider is the compatibility of crypto trading bots with crypto exchanges. Check out the best crypto trading bots in 2022 to learn how to make thousands a month. Remember to double-check whether the chosen bot will work with your platform of choice. It should operate in the desired way and in the locations you determine. The settings of crypto bots should also be looked at. There should be numerous accessible options and features to explore.
Contrary to the opinion of most traders, crypto trading bots aren’t a miraculous solution, which helps them earn money instantly. These tools need to undergo modifications so as to remain profitable, meaning solid software programs should have numerous options that users can customize.
The reputation of the team working on the crypto bot is important in avoiding hacks. It’s paramount to check where the team members attended college, their experience in working for other companies, the number of years they have been working on the program, the startup funding source, their technical abilities, etc.
The following factor to bear in mind is whether the bot under evaluation implements the desired strategy. Their websites can help you learn whether the bots support the strategies you wish to implement for your portfolio. There’s no logic in using a crypto bot that cannot support your strategy or requires more work than implementing a strategy manually.
Another vital consideration is the level of team support clients receive. The developer is expected to provide channels for traders to reach their development team when needing help with bugs or getting their questions answered. If the level of support isn’t solid, you won’t be getting any answers to your questions, which are crucial for the progress of your strategy.
There are several ways to identify whether a development team provides the required support. For instance, there should be an active Discord or Telegram community where you can get your questions answered online. The responses should be prompt, as the team works on a fast resolution of the issues. Also, multiple channels are always better than one; given users can contact the team in diverse ways.
Ease of use is another factor to consider, as most trading bots feature a complex design. They are equipped with multiple levers, options, settings, and configurations. It’s of the utmost importance for the bot to fit your level of comfort. You should take things slow in the beginning by experimenting with bots that provide several core features, which are easy to use.
Moreover, the crypto trading bot you choose should unquestionably have backtesting. Make sure not to implement a strategy unless it has already been backtested. Backtesting relies on historical data to help simulate the performance of a strategy. It helps traders understand how a given strategy performs under certain conditions and understand how it will continue to perform.
Although there’s no guarantee, backtesting is the most effective way of evaluating a particular strategy. Spare some time to perform strategy evaluation to evaluate the strategy as opposed to your goals. Strategy implementation should be closely evaluated to determine its behavior under various conditions. Since each trading bot implementation is specific, you should understand the differences between them.
In addition, the available controls and configurations of the bot provide insight into the implementation. Even if the program supports the required controls, it might still demonstrate unsuccessful results because of poor execution. The management of trading strategies depends on the infrastructure and code built around it. Server issues are likely to result in wrong timing and incorrect trades. The following link, https://www.investopedia.com/tech/whats-role-bots-crypto-trading/, explains the role of bots in crypto trading.
If you happen to lose funds because of the poor execution of a strategy, you won’t be able to get your funds back. The best way to prevent this problem is choosing a bot, which is developed by using reliable software practices. Also, you should check how open the team is to issue resolving and how long it takes for them to resolve these issues. You’re suggested to join their marketing channels to check the frequency of users reporting bugs.
Last but not least, the cost is part of the determining factor in using a particular crypto bot for your portfolio. The fee for a monthly bot subscription should be reduced in order for more funds to enter your portfolio. Certain bots are incredibly pricey, meaning they should provide value for the price. Otherwise, they’ll be just wasting the funds, which could have been used for portfolio expansion.
Reasons to use a crypto trading bot
Crypto trading bots are popular among traders owing to their incredible calculation speeds, high accuracy, and incredible memory capacity. A crucial reason for using such an automated program is the elimination of human error. A number of variables have an impact on human error, such as emotions, distractions, and acting impulsively.
In contrast, machines aren’t ruled by emotions, and they function in response to the input they receive. By providing a machine with proper input, there’s a guarantee that relevant actions will be taken. Bots are created to obey the strategies, inputs, and orders of traders. They are programmed to conduct all the instructions provided to them.
Traders, however, should remember that the momentary automated solutions available for the market of cryptos lack a complete speculative potential. It means the software cannot function independently unless traders provide it with data. Another reason to use crypto bots is their multitasking ability and power of simultaneous operation. These tools can perform several tasks at the same time, which is unfeasible for humans to do. For instance, a bot can be a scalper and a market maker in two markets at the same time.
It’s no secret crypto bots surpass humans in view of speed, as they eliminate obstacles such as human mistakes, emotions, hesitancy, and bad timing. Additionally, the trader isn’t obliged to sit in front of the computer screen 24/7. The effectiveness of these tools originates from the fact that they are able to interpret the markets, understand the necessary strategies, and adjust the position accordingly.
These abilities of crypto trading bots should be kept in mind when making long-term investments or implementing short-term strategies. Their behavior adjusts to the selected approach and risk tolerance levels. By connecting bots to market feeds, traders are provided with more information to take better steps. Nevertheless, the human brain is still indispensable regarding speculation and other life aspects having an impact on the market.
Why try cryptocurrency trading?
Cryptocurrencies have become an appealing alternative to other assets due to the numerous benefits they provide to traders. Let’s start with their volatility. Cryptos are volatile assets whose price increases and decreases on a regular basis. Given the price of cryptocurrencies is moving incredibly high, they can generate plenty of profit. Although volatility is often considered a weak point, it unquestionably provides better profit opportunities.
Cryptocurrency market hours are another reason for investors to give cryptocurrency trading a try. For example, trading stocks only happens five days a week, while crypto markets are open 24/7. Part-time traders find the market hours convenient, as they can continue working their full-time jobs and trade in their spare time.
Furthermore, traders are capable of going long or short. When going long, traders purchase a value at a given price and then sell it at a higher rate upon an increase in value. The difference between the purchase and selling price is actually the profit an investor makes.
Conversely, when going short, traders borrow a cryptocurrency, sell it in the market, and later the shares at a price that’s lower. As a result, you’ll earn from the difference in price. Cryptocurrency trading allows investors to perform both.
Tradable assets are supposed to be liquid, as it’s one of their essential elements. Liquidity refers to the speed and facility of converting crypto into cash. This applies to cryptocurrencies as well. Liquid markets enable a smoother and more efficient experience during trades. When trading on illiquid markets, traders might be faced with situations that are impossible to overcome.
Another benefit of cryptocurrency trading is leveraged exposure. Leverage is also known as deposit use, otherwise named margin. The margin provides traders with an increase in exposure to a given asset. The deposit is nothing but a fraction of the trade’s value. The rest of the value is offered by your provider.
CFD (Contract for Difference) trading enables traders to speculate on future market movements of an asset without owning it. Regarding cryptocurrencies, traders are allowed to open positions on margin by depositing a tiny portion of the overall value of a trade. Consequently, they gain excellent exposure to the crypto market with a small capital amount.
The account opening process is much faster. The signing process isn’t complicated, as it gets performed quickly and easily. The trading process doesn’t take too much time to start.
Crypto trading tips
The primary tip to follow during crypto trading is having a purpose to trade. Regardless of whether you’ll opt for day trading or scalping, you need to have a motive driving you to the end goal. The market’s volatility should always be on the mind of traders, as even a tiny mistake can lead to huge losses. Sometimes, gaining nothing from a certain trade is better than experiencing a loss.
Risk management is vital for every trader to consider. The prices of the other cryptos on the market depend on the price of Bitcoin. Similar to fiat currencies, Bitcoin is characterized by high volatility. When its price goes up, the value of the altcoins drops. Fortunately, crypto trading bots will help you manage risk and have close targets.
Regarding bot trading, you shouldn’t share your API keys with anyone, as if another person discovers your API, he/she can trade on your account. Also, you aren’t recommended to provide your bot with withdrawal access, meaning it shouldn’t be permitted to withdraw money from your account. By doing so, you prevent hackers from withdrawing money. Even if they access your account, they can only make bad trades, which you can stop by changing your passwords and deleting your keys.
Let automation pave your path to crypto trading success.
It’s never too late to join the trend!