Have you heard about those mythical trading bots and how people are making crazy gains with them? Maybe you're considering giving one a try. Well, hold your horses all,might not be as it seems in this video. I'll tell you if crypto trading bots really work, or if they're a bunch of baloney cooked up by scammers. I'll also share my thoughts on which crypto trading bots are actually worth using. Not only that, but I'll also share some of my top tips when it comes to using crypto trading bots and other automated trading tools. So you sure don't want to miss a thing. A Disclaimer I am not a financial advisor just a crypto geek , remember, government authorized individuals can be considered, financial advisors, please do your own research. My name is "MrCrypt", your crypto guy. And over here at, cryptolibrarynow,I am on a mission to help you level up your crypto knowledge. So is crypto Skynet a thing? Now let's find out.
What are crypto trading bots?
To get things started, we need a brief overview about what crypto trading bots actually are. Well, they're automated trading algorithms and software that help buy and sell various crypto currencies in an automated way. But here's the big question. Who decides what crypto to buy and when to buy or sell it? That leads me nicely on to the three major types of trading bots out there.
1) The first-: Is a crypto trading bot which makes decisions based on what's called a signals generator. These are essentially trading tips made-up by so-called experts or a computer program that's fed data and churns out a buy or sell signal. The next element of this type of crypto bot concerns risk allocation. The bot then takes the signal and decides how much crypto to buy or sell. The final part of this chain is the trade execution. This theoretically creates the new crypto position for you. Now I'm not going to sugarcoat this. I am not a fan of these types of crypto trading bots at all. Indeed, they scare the bejesus out of me and I'll explain my reasons why a bit later in the video.
2)The Second-: type of bot is what's known as an arbitrage bot. These types of bots essentially buy a specific crypto on an exchange with a low price and sell it on another exchange which has a higher quoted price in order to generate profit. Now this may sound quite odd to most people out there who believe there is a single price for a cryptocurrency at any one time. Well, the truth is that the price you might see on Google or the front end of crypto price aggregators like Coinmarketcap is just an average of all the prices given on different exchanges. Let's take Solana for example. You can see here that there are numerous prices quoted on different exchanges. If the liquidity is there, these arbitrage bots can take advantage of those market inefficiencies and buy crypto at a low price and sell it for a higher one.
Now, this may sound like a slam dunk type of crypto bot that simply cannot lose. Well, that's not true. The truth is that many of those exchanges quoting super high prices have little if any liquidity, which means that you cannot actually get your orders filled at that price. And that means no profit at all. You also have to factor in other costs that could reduce that arbitrage profit. This includes things like trading fees, transaction fees, etc. Finally,
3)The third-: type of crypto trading bot is the one that I've used and that would be a bot that trades on your behalf based on a set of instructions or rule criteria that you have given it. That might be something as simple as buy or sell X amount of ADA(CARDANO). If the price hits a certain price target, or it could be much more advanced and take into account signals, indicators and levels from numerous different pairs. It could also have a collection of conditional trade requirements if you wanted to make it more complicated once that. Condition or conditions is met, then the bot will automatically execute the trade you wanted.
So essentially these types of bots act more like automated trading tools. Also, many of these types of bot offer features like backtesting. What that means is that you might have designed a specific trading strategy to buy or sell based on a fixed set of criteria. A bot with a back testing feature can take that strategy you've devised and apply it to historical crypto price data to show you how successful it would have been. That's great for assessing different trading strategies and weighing up whether to use them in real life. However, one downside of back testing is that past performance is no indication of future results. It can also be tremendously tempting to create trading parameters based purely on historical price data and just, Assume that this historically winning strategy will crush it in the future. Now this leads me onto the subject of paper trading, which allows you to test that new strategy in real time without risking a cent. Pretty useful when further testing the performance of that strategy you've cooked up. Now that you know the basics about the different types of crypto trading bots, I need to tell you some cold hard truths about them.
The truth about crypto trading bots?
Let's face it, most of us live busy lives and we don't have time to sit all day at a computer doing crypto research and watching those charts like a hawk. But most people out there love the idea of making money in their sleep. That want has led a legion of people down the rabbit hole of crypto trading bots, where many are sold,the dream that these are magic money printing machines. now i hate to burst people's bubble , but they are not money printers. Let's think about signal driven trading bots. Now I should preface this by saying that I'm sure there are. Good signal providers out there who are robin hood type characters and wanting to make everyone rich. The actual Robin Hood that is who stole from the rich and gave to the poor. Not the Robin Hood app that stops us buying GameStop,but I digress. Ah yes, those noble signal providers who want to sell us their winning strategy. Well, consider this. If those signals were so good, why are the signal providers not keeping them to themselves? I mean, if you literally created a money printing machine, wouldn't you keep it to yourself? Then you have trading bots which are just outright scams. These generally promise you guaranteed returns for low one off deposits. The mere fact that they are guaranteeing returns should set your alarm bells ringing. But some of these returns that I've seen on these scanbot are absolutely ridiculous, like tripling your money every day. Seriously. Often these scan bots ask you to send money to a strange place or a weird broker. So seriously guys, don't fall for it. All legit trading bots keep your money on your exchange account. That's very important to understand. You have custody of your funds. Anyhow, it's For these reasons that I personally avoid all signal driven crypto bots. There's simply too much risk if you ask me and I frankly don't want anyone else making trading decisions for me. Another thing you should know when using any trading bot is that you will need to connect it to a crypto exchange account using something known as an API. That API basically gives your trading bot the ability to programmatically place trades at the exchange on your behalf. Now, most people don't dwell on this too much, but you should. The reason is that you are essentially handing over access to your exchange account to a computer program. What happens if there is compromised code or the people behind it end up being scammers? That's why it's very, very important to take note of the type of API keys that you're giving the software. You can actually set permissions for crypto exchange APIs. This basically determines what particular API keys can do in your exchange account. So you probably want to allow that crypto bot to execute buy and sell orders, but block it from making any withdrawals. You can also enhance security by whitelisting IP addresses too. That means that instructions have to come from your IP address for the action to be executed. A nice way to protect yourself from a scammy trading bot. Also, I hope this highlights why it is so important to choose a reputable crypto trading bot in the first place. The type of trading bots that I personally use simply automate your trading strategy and help you develop them by providing features like backtesting and paper trading. However, here's the truth. If you have a bad,trading strategy. You will lose money. Never forget that. Another thing to be aware of when using these types of crypto bots is that they need to be monitored. It's not as easy as coming up with an amazing trading strategy and sitting on a beach for the next 30 years while it prints you money, the truth is the crypto markets are cyclical and trends come and go. That means that you will still need to be proactive about it and keep tweaking that strategy that your bot uses if you want to continue being successful in the future. Also, you should be aware that to use a crypto bot, you'll have to keep funds on an exchange. This is not risk free as you don't fully control your keys, so that's also worth mentioning. So now that you know the reality of using the crypto trading bot, you're probably wondering why a chat like me would ever bother using one. Well, let me enlighten you.
Why should one use a crypto trading bot?
The truth is that reputable trading bots help you do a few very useful things. Firstly, I should of course state the obvious, and that is that they can trade and monitor their markets 24/7*365 crypto markets never sleep, but we humans have to. That means that you can leave the bot on overnight. Still scouring those opportunities. Without worrying about missing a potential entry or exit point. Another really useful thing about setting up those trading parameters ahead of time is that it takes the emotion out of trading. If you ask any professional trader, they will tell you that your human emotions often trade against you. They impact on your decision making ability , and lead to suboptimal trades. For example, buying near the top because you have immense fomo or panic selling because you're worried about losing funds. If you outsource that decision to an unemotional computer program that's operating purely based on code, logical decisions will be made at the most optimal times. Another bonus of using these bots is that you won't need some mega trading setup either. That's because a trading bot can execute multiple trades at once across multiple exchanges using only the rule criteria you have set. So yes, a simple laptop can do the trick. If you're still looking for a mythical crypto trading bot that will guarantee you profit, well, I'm sorry to say that you'll be disappointed. Indeed, you're highly likely to get scammed and lose all your funds. However, if these benefits of bots that I've outlined appeal to you, then the good news is that there are several bots that will work and that you should consider now before I get into the list itself. I do want to give you one more top tip test out bots before using them, test them on a demo account, then on paper trading , and then only on live trading and only with limited funds. That's to ensure that they are efficient and work exactly how you expect them to. The good news is that you can do just that with most reputable trading bots as they almost always offer a free trial. So yes, use and abuse that. Anyways, that's enough,of the mumbo jumbo preamble, it's time to dive right into those bots.
Shrimpy(crypto trading bot)-:
At number four we have shrimpy. This is a social portfolio management tool that was established in 2018 and quickly gained a lot of traction in the trading community. Now I need to be straight up and say that Shrimpy doesn't offer any signals, so if you're looking for those, you'll need to go elsewhere. However, it does offer spot trading, portfolio tracking, strategy automation, back testing and smart terminal trading. This being said, there are two particular features that I think Shrimi does really well. The first is the longer term portfolio management tool, which automates things like portfolio rebalancing dollar. Cost averaging and stop losses. That's the sort of stuff that most long term hodlers can certainly benefit from and can be particularly time consuming for those that DCA frequently or want to rebalance their portfolio often. Also, if you're new to the crypto space and want to hold over a dozen altcoins, you can automate that allocation. Shrimpy and skip jumping onto multiple exchanges to get that portfolio set up. That type of automation makes a ton of sense to me. Secondly, I'm aware that many people out there love the idea of finding a trader that's smashing it and copying their trades. Well, the good news is that shrimpy's social feature enables you to sift through the top traders and to automatically copy their trades with your portfolio. Maybe that feature is up your street. Another big bonus with Shrimpy is that it supports a bunch of top exchanges. You can check those out over here, but what is the cost of all this? Well, I would wager that the 19$ a month plan will be more than good enough for most people out there. This unlocks spot trading allows you to automate 3 portfolios, connect five exchanges. And gives you access to all core features. For those pros amongst you, a professional plan is available for $79 a month. Yes, you could save 20$ by buying an annual plan. However, I would recommend that anyone trying shrimpy out goes for the monthly plan, at least to start with. That way you can cancel that subscription after a month. If it isn't for you. In my opinion, Shrimpy is a top option for long-term crypto holders who want to automate that portfolio management or want to copy trade,some of the best traders in this space. But what if you're put off by the idea of paying for a crypto trading bot and are looking for a top free option instead? Well, I think I might have the option for you. Coming up next.
Kucoin(crypto trading bot)-:
At number 3 we have kucoin trading bot. Now Kucoin is one of the most popular exchanges in the crypto bus and is well known as being a top notch crypto exchange. So much so that one out of every four crypto holders worldwide has an account with kucoin. What many people don't know is that Kucoin offers a plethora of automated trading tools too. That includes things like selecting a preset trading strategy, dollar cost averaging, classic grid to help you sell high and buy low dynamic portfolio rebalancing so you're never too exposed to a single position and much more. What's pretty crazy is that nearly 2.5 million bots have been created on kucoin worldwide, at least at the time of creating this video. To use them all you need to do is to select your strategy, invest funds, and the bot will begin trading based on your selected strategy. It literally is that simple. Even better. This kucoin trading bot is completely free, however, just be aware that there are no integrations with other exchanges and you'll need a kucoin account with funds on it to use this bot. But what if you want a bot that doesn't limit you to a single exchange account and allows you to manage all those accounts in a single place? If that's you, then I think I have an option that will tickle your fancy.
Cryptohopper(crypto trading bot)-:
My second pick has got to be cryptohopper now, In my opinion this has to be one of the best automated crypto trading bots out there. What's incredible is that it supports over 100 different crypto currencies on literally every exchange worth having an account at.In short, this bot provides expert trading tools without the need for coding skills. If you're into more advanced trading stuff like market making and exchange arbitrage, then this bot has you covered too. It also offers you features like back testing, trialing features to help you buy and sell more efficiently than before, and paper trading to test those new strategies , be developed with no risk at all. All that is particularly useful for you to spot areas in your strategy that need tweaking and to optimize before trading for real. Another core feature is cryptohopper social trading platform that gives you access to tons of trading signals. The ability to discuss trading strategies with the Cryptohopper community, and even to buy and sell strategies and bot templates on the marketplace. However, the important thing to note here is that not everything is free. Cryptohopper does offer a very basic strip down free version, but you can get a free seven day trial for its explorer package to test out the bot and decide if it's for you. That allows you to have 80 open positions, give access to all key features like backtesting and trading automation tools. If you like what you see, then you can continue. Enjoying that explorer package for just $20 a month. However, be aware that if you want to take advantage of things like exchange and triangular arbitrage, you'll need to opt for the more expensive adventurer package at $50 a month or the hero pack at a whopping $99.00 a month. With all that being said, I imagine that the $19 package will be more than good enough for most people out there. If you're interested in trying out cryptohopper on that seven day free trial.Now I know what you are thinking , which crypto bot have I personally used? Well, that will be coming up as my final pick. My final crypto bot for you to consider needs a drum roll. And that would be 3 Commas.
3Commas(crypto trading bot)-:
Now these guys are one of the most popular trading bots out there with over 1.2 billion trades being created using the bot and an average trading volume of $22.5 billion. Oh, and fun fact, Sam Bankman freed of FTX and Alameda research fame, has invested in three commas, so you know, he sees value in it back to the platform, though, and it has a super intuitive interface packed full of detailed analytics and a ton of functions. The bot also enables you to set stop losses and take profit targets and craft your own trading strategies. Personally, I find 3 commas smart trading functionality particularly useful here. You can easily set up things like step selling. This is when you sell coins in chunks. When the prices rise. So you might want to sell half your Bitcoin when the price reaches 50K and another 25% when it hits 52K and the remaining 25%,when BTC hits 53K. Smart cover allows you to automate the securing of your profits to protect you against unplanned market volatility. That's done by selling coins and buying them back at a lower rate. Pretty handy if you ask me. Then you have features like training orders for take profit and stop losses. This essentially adjusts the closing value of the trade when the price changes. When the price rises or falls, your take profit level and stop loss will automatically follow again. Pretty damn useful for many crypto traders out there. On top of that you have features like paper trading and of course the three commas marketplace. Here you can get access to a plethora of ready to use strategies and bot presets. Created by other traders for those that want signals, you can get access to those on the marketplace, and here you'll see the performance of each signal provider and how many 3 Commerce users are following them. In terms of exchange support, well, let's just say with 23 supported exchanges, you're probably not going to have any issues using this bot. Yes, the likes of binance, kucoin, Hobie, Kraken and many more are supported when it comes to cost, I'd recommend that you take advantage of three commas free three day trial for their pro version. That way you can get access to every feature and make sure it's for you without spending a satoshi linked to that is in the video description below. After that, costs range from anywhere between $14.50 per month to $49.50. If you're not into Futures Trading, then honestly, those 14.50 or $25 plans are going to be what you want. In my humble opinion, 3 commas has also got one of the best looking interfaces on the list. It also gives you access to some of the best trading features out there, a plethora of ready to use strategies and resets, and that all important paper trading to battle test your own strategies. Basically, if you want to automate your crypto trading, I would certainly give 3commas a try on that free trial. In terms of downsides, well, I'd say that it might not be the best option for new traders. However, they do have a ton of very useful and well written guides to help those that are just dipping their toes into those crypto bot waters.
My final thoughts on crypto trading bot-:
The truth is that crypto trading bots do work, however not always in the way that most people think. If you are going to be using a crypto bot, just be aware that any bot claiming to guarantee you a profit isn't going to work and is a scam. Also, crypto bots are not going to make you a crypto millionaire. However, they can be used intelligently and they do equip you with the tools to optimize and automate your trading strategy. I also want to again reiterate the fact that past performance cannot be used to judge future returns and another thing to hammer home is that if you're using one of these bots, you'll need to keep funds on an exchange which has its own risks. Personally, I like to spread out my risk when using bots by having funds on multiple exchanges. So you might want to consider that too. Now it's time to hear your thoughts, people,what do you think of crypto trading bots and have you got any questions for me? Hit me up as ever in the comments. And while you're crafting that crafty comment, I want to tell you about my socials page. Here you will find link to my official twitter.
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