Crypto Trading Bots: Automating Your Trades

Bots are automated software that perform tasks such as trading cryptocurrency.

What are bots?

Trading bots have been used in the stock markets for decades, perhaps reaching their zenith thanks to sophisticated high-frequency trading (HFT) software. Today’s bots are able to analyze multiple markets simultaneously and automatically buy or sell in response to real-time changes. A number of key advantages over human trading speak in favor of trading bots. Compared to humans, bots work much faster and do not need to rest.

Bots are not emotionally influenced, they just make choices that are statistically the most profitable. Bots can process huge amounts of data, processing and analyzing infinitely more information compared to a human in the same period of time.

In the practice of cryptocurrency trading, bots find several common uses. They can be used to automate time-consuming but routine tasks, such as regular portfolio rebalancing. They can be used to ensure that orders are executed at exactly the right time – for example, to execute a sell order when an asset reaches a certain threshold. In most cases, cryptocurrency trading bots fall into one of four categories: arbitrage, market trading, technical trading, or profile automation. While bots can make trading easier, they are far from always guaranteed to be profitable. The clever algorithms and massive computing power available to the largest institutional investors give them a real competitive advantage, but that is not available to the average crypto trader. However, even open-source bots can make marginal profits, which can still represent an improvement over index tracking.

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