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Updated on 5 January , 2022
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6
mins read
- Can you automate Crypto Trading?
- Are Bots good for Crypto Trading?
- Can I use a bot to buy and sell crypto?
Automating your income
stream is the best way to make big bucks and build long-term wealth. This post
is all about how you can automate your Crypto Trading and make money while you
sleep.
Trading is a skill that
is hard to master and takes a few good years to develop. Therefore, to be a
successful trader, one needs to devote substantial time to the skill.
Further, you need to
keep track of the markets at all times. Additionally, to add more stress, the
Crypto market is open 24*7. This means that a lot can happen when we are away,
taking breaks, or sleeping.
So, we started looking
for alternative methods to encash all the trading opportunities available in
the market. Finally, something clicked.
Automated
Crypto Trading!
How about giving our
trading strategy to a Crypto Trading Bot? The bot can execute all the
transactions as instructed. Our proxy (crypto bot) would trade for us 24/7.
Thus, making maximum money possible.
It is like a gem found
in a haystack. And that’s what we want to share with you as well. So, let’s get
started.
Page
Contents [hide]
·
What is Automated Crypto Trading?
·
Types of Automated Crypto Trading Bots
Platforms
o 1. Exchange Bot Trading Platforms
o 2. Independent Bot Trading Platforms
using Exchange API
o 3. Smart Contracts based Bot Trading
Platforms
·
Types of Automated Crypto Trading
Strategies
·
Pros and Cons of Automated Crypto
Trading
o 1. Benefits of Automated Crypto Trading
o 2. Limitations of Automated Crypto
Trading
·
Conclusion – Guide to Automated Crypto
Trading
What is Automated Crypto
Trading?
Automating your crypto
trades with the help of an Algorithm or Bot can be termed Automated Crypto
Trading. The bot would run 24/7 and execute the transactions on your behalf.
For Automated Crypto
Trading, you can either build your own strategy or, if you are a complete
beginner, the platform also gives you its own strategies that have worked in
the past.
With the help of
automation, you can encash all the possible opportunities in the market, keep
your emotions out of your trading process, and, most importantly, Make
Money While You Sleep.
And the best part is
that most bot trading platforms are Free to Use. There is
no cost other than the typical transaction cost.
Types of Automated Crypto Trading Bots
Platforms
You can run your Crypto
Bots on many different platforms. Primarily these platforms can be classified
as Centralized and Decentralized.
1. Exchange Bot Trading Platforms
Several Centralized
Exchanges have a Bot Trading feature. However, the issue is that these
platforms have complete custody of your crypto funds.
In this case, you need
to trust the platform’s security and integrity. If there is an exploit on the
platform, you may lose all your funds. Further, most centralized platforms
(except Pionex) have limited Bot Trading Strategies.
Binance and Pionex are some of the top centralized
platforms with a Trading Bot feature.
2. Independent Bot
Trading Platforms using Exchange API
Independent Bot Trading
platforms do not have custody of your funds. They just give trading
instructions to your existing crypto exchange account. However, you are
still using a centralized exchange which has its own risk.
This is done by using
the API (Application Programming Interface) key of the crypto exchange on which
you have your crypto funds.
3Commas and Bitsgap are a few of the top independent
Bot Trading Platforms.
3. Smart Contracts based Bot Trading
Platforms
This is, so far, the
most decentralized option of bot trading. However, this is not beginner’s
friendly.
A smart contract is
created to deposit your crypto assets and set algorithmic instructions. This
smart contract would place buy and sell orders on your behalf.
However, smart contracts
are also prone to exploitation. Therefore, you need to ensure that the smart
contract you are using is safe and resistant to exploits.
You can explore the top
Automated Crypto Trading platform here:
Types of Automated
Crypto Trading Strategies
There are unlimited
trading strategies that can be used for Automated Crypto Trading. However, the
following are the most popular and beginner-friendly strategies one can use:
1. Grid Trading Bot
Grid Bot Trading is a
method through which you can automate your Scalp Trading Strategies. These bots
utilize the volatility of a crypto token to scalp trade in an automated way.
The best time to start a
Grid Bot is the last phase of the Bear Market when the trend reverses and the
market is set to go higher.
In the case of a Grid
Bot, a price range is pre-decided. For example, suppose for BTC (Bitcoin)
token, you set a price range of $27000 to $37,000. This range will be further
divided into grids. Let’s assume we decide to create 10 Grids. So, the grids
would look something as follows:
|
|
Grid Price Range ($) |
|
1 |
27,000 –
28,000 |
|
2 |
28,000 –
29,000 |
|
3 |
29,000 –
30,000 |
|
4 |
30,000 –
31,000 |
|
5 |
31,000 –
32,000 |
|
6 |
32,000 –
33,000 |
|
7 |
33,000 –
34,000 |
|
8 |
34,000 –
35,000 |
|
9 |
35,000 –
36,000 |
|
10 |
36,000 –
37,000 |
Till the time
price of BTC remains in these Grid ranges, you will be making money. The Grid
bot will keep buying and selling within these ranges. As per our experience,
with some practice and guidance, a trader can earn 0.5% – 1% per day (180% –
360% annually) through a Grid Bot.
For more information on
these bots, you can refer to our earlier guides:
Further, once you get
the hang of how grid bots work, you can check out our Grid Bot Trading
Course on CoinSutra VIP. The Course allows you to learn the
specifics of a grid bot and what settings would enable you to make money.
Further, you also get access to our VIP community.
2. DCA Trading Bot
DCA, a.k.a. Dollar Cost
Averaging, is a strategy where you buy a crypto token in small amounts over a
period of time. Let’s say you want to invest $100,000 in BTC. Then you have the
option to either invest this $100,000 in one single transaction (a.k.a. lumpsum
investment), or invest $1,000 in 100 transactions in the next 100 days.
This method of piecemeal
is called Dollar Cost Averaging. DCA primarily helps an investor or trading in
2 ways:
- It reduces the
impact of price volatility as an investor can average out their cost.
- It brings
discipline to your investment or trading process.
Some bots can further
automate a DCA strategy for you. This means that you don’t need to process
those 100 transactions manually. The bot will do that for you.
You can refer to our List of Best Crypto DCA Bots in the
market. Further, you can read our step-by-step Binance Auto-Invest guide to do DCA
automatically on Binance.
Pros and Cons of
Automated Crypto Trading
Automated Crypto Trading
has following Pros and Cons:
1. Benefits of Automated Crypto Trading
Following are the
benefits of Automated Crypto Trading:
a. Saves Time
Bot trading saves an
ample amount of time. You don’t need to sit in front of the screen and wait for
the right time to buy or sell. The bot will do it for you automatically.
b. Beginners can also
trade
Generally, for manual
trading, you need to devise your own strategy. However, many bot trading
platforms also provide you with a pre-devised strategy that is very handy for
beginners.
c. Builds discipline –
keeps emotion out of the equation
Bot trading is an
excellent method for emotionless trading. It simply follows a strategy. This
keeps your trading process objective and avoids the havoc of FOMO (Fear of
Missing Out) trading.
d. Encash all possible
opportunities
Because a bot runs 24/7,
you can encash all the possible trading opportunities. This gives this strategy
an edge over the manual trading process, which requires each order to be placed
manually.
e. Faster than human
Bots are much faster
than humans. Therefore, it is an excellent way to beat manual traders in the
market.
However, Automated
Crypto Trading has a few limitations as well.
2. Limitations of Automated Crypto Trading
The limitations of
Automated Crypto Trading are as follows:
a. No guarantee of
beating the market
Automated Crypto Trading
is a tool that you can use for automation. It only brings convenience to your
trading process. However, it does not guarantee any positive results.
b. API issues
The platforms you use
for Automated Crypto Trading may have server or connection issues. This can
lead to the order being unprocessed. Thus, there is a possibility of missing
market opportunities.
Conclusion – Guide to
Automated Crypto Trading
Automated Crypto Trading
is a phenomenal method of honing your trading skills and making money while you
sleep.
We hope this post helped
you crack Automated Crypto Trading. In case you have any feedback or comments,
then let us know.
Have you ever explored
any Bot Trading Platform? How was your experience? Let us know in the comments
section.
Please note that nothing
written in this post is a financial advise. Please consult your financial
advisor before making any financial decision