Human vs Crypto Bot: What is Better to Get Profit

What are Crypto Bots?

Types of Crypto Trading Bots

  • Trend trading bots. Works on a specific trading platform. Earnings are made on different timeframes, from short to long. This bot takes into account the momentum of a particular asset, analyzes it and decides to buy or sell.
  • Arbitrage bots. Under the influence of various factors, the price of bitcoin on different sites can differ by several tens of dollars. The bot operates on two or more trading platforms. The primary income is on the difference in rates between them.
  • Coin lending bots. This is the method when you lend coins to margin traders. Later they will return you the loan with percentage.
  • Market making bots. This bot utilizes orderbook spread to bring you profits. The more actively an asset is traded, the wider the spread will be, the more profits you will get. The key principle is to sell at a higher value than a selling price and do it regularly.

Advantages and Disadvantages of Cryptocurrency Bots

Benefits of Cryptocurrency Bots

  1. Saving time. A well-designed cryptocurrency bot frees up a lot of time for the trader. He needs to regularly check the trading statistics, but there is no need to monitor the cryptocurrency market all day long.
  2. No emotions. Most of the traders’ losses are caused by being influenced by emotions. Having once made an erroneous decision, it can be difficult for a cryptocurrency trader to quickly get out of a position. This leads to losses. The bot is devoid of emotions and trades according to a clear algorithm. It is not afraid of any psychological influences.
  3. Discipline. Another popular mistake traders make is the loss of discipline. Crypto-asset traders sometimes ignore violations of their own rules. Because of this, they are losing money. Cryptocurrency is a volatile market. Therefore, such an aspect as a discipline can play a cruel joke with a trader. A bot, unlike a human, is not susceptible to this. It clearly uses the algorithm and the bot executes certain commands, at a certain time, according to certain rules.
  4. The efficiency of calculations. It is difficult even for a talented and experienced trader to quickly calculate the effectiveness of a particular deal. The bot does everything automatically, which improves trading efficiency.

Cons of Cryptocurrency Bots

  1. They require constant revision and upgrade. The situation in the cryptocurrency market is constantly changing. There is no one-size-fits-all strategy that works anytime, anywhere. Continuous improvement takes a lot of developers’ time. And a bot’s algorithm that is not updated on time can lead to a loss of the trader’s profit. Bot users will have to regularly reconfigure their strategies in response to changes in the market situation.
  2. Require control by the trader. There are still no bots that don’t need to be controlled at all. Working with a trading robot is better and faster than working on your own. But in no case you should leave the situation uncontrolled. The bot can lose your money. To prevent this from happening, you need to set limits on the maximum daily losses on the account.
  3. Big competition. Algorithmic strategies are used not only by individual traders but also by large financial companies. In hedge funds, dozens of experienced traders and mathematicians can work on cryptocurrency bots at once. It is extremely difficult to withstand such competition.

How the Robot Trader Works

How to Choose a Bot for Trading Digital Assets

  1. Give preference to working through API keys. Many scammers are working on the network who every day come up with new working ways to get hold of your cryptocurrency. Therefore, it is better to give money not to the management of the algorithm, but to take software by subscription. Such a program will be individually customized to your needs and trade from your account via the API. At the same time, the bot cannot withdraw money from the exchange on its own. The trader will do this.
  2. There is no guarantee of profit above 300%. The less profit they promise you, the more chances to get it. The opportunity to get over 300% profit is a gimmick and another marketing ploy of developers who want to get high profits for their bots. If anyone has such a super bot for trading cryptocurrency, then they clearly will not share the get-rich-quick resource with other traders.
  3. Check the results. Require developers to provide tools for back-testing the bot. It is also important to view the report from the exchange on completed operations and trading results. This will show how efficient the bot is at work. If the developer is unable or refuses to provide such information, then there is no guarantee that such a bot will bring you profit.
  4. Read professional reviews. On the Internet you can find dozens of professional reviews of the work of crypto bots. The authors collect information about the advantages and disadvantages of each bot in their reviews. You will also find many comments from traders about the experience of using cryptocurrency trading bots and you will understand what you should pay attention to when choosing.

Popular Bots for Cryptocurrency Trading

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