Nowadays, lots of teams provide paid and free crypto trading bots for Bitcoin and other cryptocurrency. It’s a hassle for a crypto traders like you and me to choose between these services, so we've gone and found the best one for you!
When should you use a Crypto trading bot?
Many functions that a well-executed bot can conduct for you are rebalancing, portfolio management, data collection, smart order routing, etc.
What exactly can you improve with trading bots? Let’s take a look.
1 Repetitive Tasks
Repetitive tasks consume a lot of time and effort. A crypto trading bot will allow you to virtually “copy and paste” specific tasks to conduct trades with ease. One of the best ways where bots can help with repetition is in periodic rebalances. If you want to conduct hourly rebalances, then you’ll need to, as the name suggests, rebalance your portfolio every hour. So, you have two options:
- Set the alarm every hour to rebalance the portfolio and lose your sanity in the process.
- Create a trading bot and program it to rebalance your portfolio every hour till the end of time.
Timing and achieving a high degree of accuracy in your trading is essential for trading. Every single trade that you make can have an enormous impact on your potential earnings. Let’s take an example. Suppose the price of Bitcoin is going down, and you want to sell your position the moment BTC hits the $8,750 support line. If you were to do this manually, you’d have to patiently and carefully observe the price chart, and even then, you may not pull the trigger at the right time. The bot can be easily programmed to monitor the market and execute a trade at the correct times.
3 Complications can be simplified
Consider the example of “smart order routing.”
- The idea is to route trades through numerous trading pairs.
- Every single trading pair needs to be carefully determined as per its timing, asset quantity, and trading price.
- This entire route needs to be finished within a specific time-limit before the market conditions change.
It seems pretty easy-to-understand, right? However, the execution of this trade could be nearly impossible. This is just one of the many examples of the several complexities that should be factored in while training. Some strategies could be almost impossible to implement.
Trading bots could be used to automate these complicated and seemingly impossible strategies with ease.
What is the difference between a trading bot vs a human?
1 – Longevity. Bots can operate 24/7, humans need to sleep (and rest).
2 – Speed. Robots operate magnitudes faster than a humans thinking time plus reaction time.
3 – Emotionless. Robots aren’t driven by greed or fear. They’ll always do what’s statistically more likely to win.
4 – Capacity. Robots can process gigabytes of data per second. Humans quite simply can’t process that much data in that timeframe.
You see, there are many benefits to running bots and it’s all down to their skill set being vastly different to that of a human. Bots are consistent and monotonous. To be profitable you need consistency and quite frankly have to do everything thats highly counterintuitive to human nature.
Like, running towards a fire.
However it’s worth bearing in mind, a bot, any bot, is only ever going to be as good as the human creating it. The old adage is true, garbage in, garbage out.
There are ways in which humans can outperform and that’s mainly with subjective thinking.
When a particular piece of information doesn’t have a specific outcome attached and lateral or second-degree thinking is needed to understand the implication then you’re better off with a human.
I wouldn’t really worry about this too much because whenever a bot reaches a state that’s fairly subjective it can choose to not invest at all.
What to look out for when picking a trading bot
Before you buy/trial/invest in any bot, ask yourself these 3 questions:
- What is the professional experience level of the senior leaders of that firm? If they haven’t managed >$100m and have a good track record doing so, you should probably bat on.
- Are their algorithms widely known and openly available to anyone? (hint: if they’re giving you trade-level data then their algorithm can quite easily be replicated). If so, whatever “edge” their bot has will be quickly arbitraged away.
- Is their success aligned with your success? If you lose money are they willing to cut their fees? If you make money will they succeed too? If they just hand you a platform and send you on your merry way to figure things out by yourself it’s never a good sign unless you know exactly what you’re doing.
Unfortunately, choosing a trading bot to go with isn’t as trivial as answering these three questions.
In my opinion, everything ultimately comes down to people.
Forget about the marketing malarkey surrounding the company and ask yourself, would you trust this person with your money?
Where to go from here?
Cryptohopper was started by two brothers. After hearing about the opportunities of cryptocurrencies for the first time, they were hooked.
One of them was successful as a daytrader. The other brother, a brilliant web developer, didn't have the funds to invest. This had him thinking: What if there was a way to let a bot trade for you? It could work 24/7, trading as many coins as you wanted, constantly monitoring the market.
Soon, he turned this idea into reality after building a prototype on a raspberry pi, with a 3d printed case – the very first Cryptohopper.
One day, the day trader proudly showed his trading tactics to his father, who was not impressed. “Whats wrong with you kid. Watching your computer screen all day long”, “stop wasting your time and focus on the important things in life”.
He was right and both brothers knew it. At that point they teamed up and turned to their hopper and started brainstorming how to make the ideal trader. What issues do humans face when trading, which can be overcome by a bot? Every day they worked on making the bot smarter and faster. Before long they had developed the ideal trading companion.
Within weeks, family, friends and friends of friends were all asking if they could use the bot. What started as a personal tool, was quickly in high demand. As the community grew, the brothers realized that they could help a lot of people with the Hopper, and in return those same people could help them by providing ideas to make their Hopper even better. At that moment, they decided to make Cryptohopper open to the public. This was the start of the Cryptohopper company history.
A hopper with multiple fully customizable strategies and the option to back test it all.
You can trade on technical indicators, or subscribe to a signaler who sends buy signals. All of our signalers have daily performance reports, so you can check how accurate they are.