When it comes to trading cryptocurrency, there are many obstacles for the average user – the complexity of technical analysis, the skills involved in identifying trends and, of course, the volatility of the market, meaning coins can soar or plummet in value overnight. But what if you could trade constantly, even in your sleep, making a steady profit every day, with minimal effort? Welcome to the world of crypto bots.
But is it too good to be true?
The word ‘bot’ might bring to mind Russian hackers and fake Twitter accounts but crypto bots are perfectly legal and fully supported, if not exactly encouraged, by major exchanges such as Bittrex and Binance. Put simply, they are computer programs that remove the emotion from trading. They buy and sell your cryptocurrency for you, using algorithms to follow the trajectory of a coin, identifying when to buy and sell, and, in theory, allowing you to make small, round the clock profits. Used wisely, they are said to give an average profit of around 1-2% each day – though risk-seeking traders have reported much more than this.
They’re not a new concept – trading bots have been popular in conventional financial markets for years, but they cost many thousands of pounds, putting them out of reach of the casual investor. Crypto bots are much more affordable, costing just a few hundred dollars for a one-off fee, or cheaper monthly subscriptions. Some bots are even open-source and completely free, although these lack the bells and whistles and support network of the paid bots.
However, they aren’t a magic solution for endless profit. They require regular tweaks and adjustments in strategy – if you set-and-forget you’ll miss out on gains, or suffer serious losses. As such, some understanding of the markets is required, along with a basic grounding in the theory of investing and trading. You’ll need to update your strategies according to changes in market conditions.
Other factors also come into play, such as the amount of currency allocated, the trading pairs you allow it to work with, and how long you let the bot run for. Unlike traditional financial systems, crypto markets never sleep, meaning your bot can trade 24/7. And while it’s possible to run the bot from your home computer, most users prefer to use a dedicated VPS (virtual private server) so the bot can run in the cloud, without risking any downtime.
At the time of writing, there are over a dozen bots available, ranging from the most advanced, such as Gunbot and the well-established Haasbot, to the more user-friendly Profit Trailer. Be extremely careful before you purchase a bot as they require your API key for the exchange, meaning they have access to your wallet. It’s essential that you do your research first.
Thankfully, there are plenty of videos on Youtube, and busy communities on Discord and various message boards that discuss these bots in detail, plus trusted names such as Cryptognome and Crypto Crow who track their profits and losses on a daily basis.
Last year’s dramatic rise in the value of bitcoin and most altcoins against fiat, saw even the most inactive crypto holder make substantial gains. However, market-savvy crypto bot users made – and continue to make – dramatically more profit. But be careful, bots may make for a more streamlined process but if you don’t have an informed financial strategy to begin with, you may end up doing little more than automating a bunch of bad trading decisions. Unless you have a good understanding of trading, when it comes to crypto the best strategy could be the most simple: Hodl.