5 Best Bitcoin Trading Bots
As the bitcoin market has grown in popularity, so has the use of bitcoin trading bots.
These are software programmes that interact with bitcoin exchanges to analyse trading data and then use this information to place buy or sell orders on behalf of the user.
The bots act on a predetermined and pre-programmed set of rules to monitor activity in the markets.
Bots may come with trading strategies ready installed, but the user can also customise the bot according to their preferences.
There are now many bitcoin trading bots available, some for free and some in exchange for a subscription fee.
In this article, we have brought together 5 of the best bitcoin trading bots.
We also look at some of the advantages and disadvantages of using a bot and explain what to look for when choosing a programme.
Why You Should Consider Using a Bitcoin Trading Bot?
The cryptocurrency market is known for being highly volatile. It also never closes.
This can make bitcoin and other cryptocurrencies very profitable when traded wisely but also increases the risk of significant losses.
A bitcoin trading bot can help to mitigate some of these risk factors.
Unlike humans, bots will only make trades based on the data and trends available, so emotions and impulses are eliminated from the decision-making process.
Bots can also operate around the clock, so the user can continue trading even while they are asleep or otherwise occupied.
Trading bots also have the advantage of being able to work faster and more efficiently than a human trading manually.
When specified correctly, they can analyse data and execute trades across multiple exchanges and multiple cryptocurrencies.
What Are the Pros and Cons of Using a Bitcoin Trading Bot?
It is important to remember that a trading bot is not a silver bullet.
The right bot used effectively may help to increase your profits but there are also several drawbacks and risks to consider before deciding to install a bitcoin trading bot.
- They eliminate emotion. Huge price fluctuations in the bitcoin market can lead human traders to make erratic and impulsive trades. Trading bots remove this risk by placing orders only according to the data available and their predetermined set of parameters.
- They are highly efficient. While human traders can only study one cryptocurrency market at a time, bots can scan and analyse several simultaneously, spotting opportunities that a trader might otherwise miss.
- They are fast. Speed is of the essence in the fast-moving world of cryptocurrency. It can take time for a human to carry out a trade, and all the while the trade may be losing its value. But bots can place orders instantly, taking advantage of opportunities as soon as they arise.
- They run around the clock. Even the most dedicated bitcoin trader cannot sit in front of their computer all day and all night. A bot will carry on monitoring the market and making orders in their absence, so they never have to stop trading.
- They need monitoring. You can’t just set a bot running and forget about it, you will still need to keep an eye on how it’s performing and make adjustments as needed. Also, a bot will not take into account external factors that may affect the market, such as world events or breaking news, so may make poor trades without input from a human trader.
- They require some experience and knowledge. Although bots may come pre-set with trading strategies, most perform best when reconfigured to the user’s specifications. So the user will need to have an understanding of how the market works and the technical aspects of trading with a bot.
- They can present a security risk. Bitcoin trading bots communicate with exchanges through Application Programming Interfaces (APIs), which means two machines are working together without human intervention. The centralized nature of bots and exchanges can make them vulnerable to hackers so you will need to take steps such as keeping your API key secret and switching off automated withdrawals. You should also check the security record for any bot you are considering.
Things to Consider When Choosing a Bitcoin Trading Bot
One of the key attractions of a bot is its ability to continue trading around the clock.
If your bot keeps going offline or suffers from other glitches, you will miss out on opportunities.
Check its reliability by reading reviews from other users.
As mentioned above, hackers target trading bots and exchanges so it’s crucial to ensure that your bot is as secure as possible.
Look for one that has a good track record for security.
Check that the team behind the bot is credible and legitimate and that there is an active community of satisfied users.
Ease of Use
Most users want a bot that will make trading easier for them, so look for one with an intuitive interface that suits your level of expertise.
You should also check the level of customer support, how updates are rolled out and whether bugs are solved in an efficient and timely manner.
It is also important to find a bot that best aligns with your trading strategy and to check how much customisation will be required.
A bot is only effective if it is consistently achieving profits for its users.
Before investing in a bot, you should read reviews to assess its success rate.
Some bots are available for free, while others will come with a significant price tag.
Generally speaking, a paid-for bot offers superior features and a higher level of service, but you should weigh up what you are getting for your money and whether it is worth the investment before making a decision.
The Best 5 Bitcoin Trading Bots