With values and numbers fluctuating dramatically even within minutes and seconds, cryptocurrencies are known for their highly volatile nature. Unlike the stock market, cryptocurrency market never sleeps, which can be a highly stressful scenario for the traders.
Yes! Traders may trade cryptocurrencies from anywhere at any time of the day. In many situations, traders are unable to respond to the fluctuations in prices to make the best investments. They are unable to devote as much time to trading as required to make profits.
And, traders who are already familiar with crypto investments will also be familiar with that particular feeling of waking up in the next morning with pleasant or unpleasant surprises whenever they see large ups or downs in the market. To earn profits and managing risks, 24-hour surveillance of trading exchanges is required.
This is where; crypto trading bots come into action! They are nothing more than automated crypto trading and execution software that work on behalf of the human traders.
The explosion of popularity in cryptocurrencies has resulted in an increase in the number of crypto trading bots and exchange platforms. These bots are either available for free from open-source platforms, or licensed to the users in exchange for a flat fee.
As the Bitcoin market has grown in popularity, so is the use of Bitcoin trading bots. These software programs usually interact with the Bitcoin exchanges to analyze trading data and then use this information to place buy or sell orders.
The use of trading bots or automated trading features is rapidly becoming popular in cryptocurrency trading and for obvious reasons. If you trade Bitcoin, you have to watch the markets to identify trading opportunities in the market and also to determine whether those opportunities match your trading criteria before executing a trade. This analysis requires patience and dedication. But what if you could use a Bitcoin trading bot to do the work for you or to perhaps even execute trades on your behalf?
All this explains the usefulness of the Bitcoin trading bot that can be applied to multiple cryptocurrencies.
Before moving further, let’s understand what are crypto trading bots for Bitcoin or other cryptocurrencies?
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Crypto trading bots
Crypto trading bots are a set of trading strategies, AI-powered programs that automate crypto trading on the behalf of a trader for the study and interpretation of current market conditions. These bots are able to acquire market data, evaluate it, measure and monitor the associated market risks, and then, buy or sell crypto assets in a user-friendly interface.
Different crypto trading bots have their own algorithms. Some of them offer pre-built programs while others help traders to write their own scripts or strategies.
Using a crypto trading bot is just like hiring a professional to handle your crypto trading which you sit back or sleep quietly, and watch your profits increase.
Say, you program a Bitcoin trading bot to buy additional Bitcoin if the price falls to a certain level. Or you can sell Bitcoin if the price increases to a predetermined level. This way, you can save lot of time and money as compared to trading by your own.
A crypto trading bot:
- Monitors the market data
- Predicts the risks associated
- Buy/sell assets
Understanding the basics of crypto trading bots
Let’s understand what is bot trading?
Bot trading is using software to automate your trading. The crypto trading bots talk to an exchange via API, and then place a buy or sell order for you.
What is an API?
API, or Application Programming Interface, is an interface for an application that allows it to send or receive specific types of data.
API is a way for your trading bot to interface with the cryptocurrency exchange to place buy and sell order, and to collect the price or balance data.
Crypto trading bots simplify the trading process since the trader does not have to do the market analysis when there is a system that can be programmed to do the same thing faster and more efficiently. These characteristics provide the trader with more advantage in terms of more profit-making potential while at the same time reducing the margin of error.
How does a crypto trading bot or Bitcoin trading bot work?
A bot is simply a set of instructions that are designed to carry out specific activities. In this case, the bot will be designed to execute trades on a cryptocurrency exchange or crypto trading platform such as Growlonix.
There has to be communication or interaction between the bot and the broker or trading platform. In other words, the bot has to send instructions to the trading platform’s API, similar to how an individual would click on various functions on the platform to execute a trade.
The set of instructions programmed into the bot tell it how to react to the fulfillment of various conditions, assuming that the trader already has a solid strategy that the bot can follow. The instructions would thus be based on the strategy. For example, a bot can be triggered to react to the price reaching a certain price point but it may also be programmed to also be triggered when various indicators reach specific levels.
Growlonix allows its traders to utilize an API to interact with the exchange. This interface lets you pull data from the exchange and make specific changes to your account using a bot.
Using your API key, you can connect the Growlonix account to numerous crypto exchanges in the market. The trading bots offered at Growlonix can do efficient market analysis as well as can perform trading.
There are two different configurations which you can use depending on the market conditions.
Let’s say, market is having the positive momentum and prices are anticipated to increase. As the price continues to increase, the trading bot sells the cryptocurrency to increase profits. Apart from this, the trading bot is also capable of balancing the risk exposure.
Using a trading bot + API allows you to execute trades automatically.
A Bitcoin trading bot that is automated to handle market analysis and trade execution would therefore require the trader to input his/her preferences. It would then execute trades and close trades based on those preferences. For example, the Bitcoin Trading bot can execute a trade if the price reaches a predetermined level and close the trade based on preset take profit or stop-loss levels
Bitcoin Trading bot
Today, people are talking about Bitcoin trading all over the globe. Rather than entering every trade into crypto exchanges manually, one can automatically use a trading bot to automatically access data from the user’s exchange account and place their trades automatically.
The crypto trading bots implement strategies that can do most things including building strategies and trading suiting the trader’s requirements. Bitcoin trading bot is a piece of software developed to automate the trading process for Bitcoin at Growlonix. This bot gives advantages to the traders who own it over others. This bot allows traders to trade Bitcoin daily on their own.
Bitcoin trading bots access data on the crypto exchange for users. The user allows the trading bot to access their account by sharing the API keys. This tells crypto exchange platform that the user has authorized the bot to access the exchange account details.
How to launch a Bitcoin trading bot?
- Signup on Growlonix
- Connect exchange
- Choose trading strategy
- Set up your bot
Growlonix allows its traders to connect to different exchanges such as Binance, Bittrex, BitFinex,etc. to trade Bitcoin.
Why you should consider a Bitcoin trading bot?
We all know that the cryptocurrency market is highly-volatile. When traded wisely, this can make Bitcoin or other cryptocurrencies very profitable. And, at the same time, it also increases the risk of significant losses.
A Bitcoin trading bot can help traders to mitigate these risk factors as the bots make trades based on the market data and trends available.
When specified correctly, these bots can analyze data and execute trades across multiple exchanges and cryptocurrencies.
Automated Bitcoin trading
Automated bitcoin trading bots can manage your trading portfolio and help you make smarter trades in the crypto market.
Yes! You have guessed it right! Automated Bitcoin trading involves a trading bot trading BTC for you. It starts with a user backtesting his trading strategy and involves trying out the strategy in a simulation before it does live trades. Once there is a solid strategy, the trader gives access to its data to the exchange account.
And, to do this, they need to give public and private API keys to the trading bot.
Once it is there, the bot will execute the trader’s strategy. Usually, automated bitcoin trading bots don’t require permission to withdraw your funds and one must use this bot carefully.
Automated trading bots operate by responding to the current market conditions by collecting the information they need so as to execute a transaction based on the analysis.
Types of crypto trading bots
Crypto trading bots come in a variety of types based on different features and trading strategies. Different types of trading bots available in markets are:
- Market-making bots
- Arbitrage bots
- Smart order routing bot
- Price mirroring bots
- Paper trading bots
What should I look for in a good Bitcoin trading bot?
There are quite a number of considerations that you should pay attention to when selecting or developing a Bitcoin trading bot.
- Integration– A good Bitcoin trading bot will allow integration with multiple platforms. For example, if you use Growlonix, you can switch between different exchanges such as BITTREX, BitMex, and Binance among others. It would be convenient to have a bot that integrates easily without needing much work, thus giving the trader a smooth experience.
- Backtesting– A good Bitcoin trading bot should facilitate backtesting. This will allow you to tweak it to match your trading strategy. You cannot simply use a bot without knowing whether it will trade the way you would trade using your strategy.
- Trading signals– If you choose a bot that will do market analysis on your behalf, then you want it to notify you when the market conditions are right so that you can decide whether to execute or not. The Bitcoin trading bot should therefore have the ability to give trading signals for it to be an effective tool.
- Security and reliability– The concept of safety can be interpreted differently when it comes to bots. For example, a Bitcoin trading bot that is buggy and does not work sometimes might risk your investment. Imagine if a bot failed to execute a stop loss when it was supposed to. This also ties into the reliability aspect.
The best time to use Bitcoin trading bot
The crypto trading bots offer endless possibilities and opportunities to the traders. Bots can be used to rebalance or manage the portfolio, and collecting data. One can also use them to enhance the order routing.
One can choose or make a crypto trading bot based on the trading goals. You don’t have to choose a specific bot as all the bots can do several functions with correct coding. Nevertheless, if you find any time-consuming or complicated task; pick a bot that can automate them.
An ideal Bitcoin trading bot can help you perform the following:
- Complex trading
- Enhanced precision
- Repetitive tasks
- Saving time
Are trading bots profitable?
The success of a trading bot depends on several factors:
- Accuracy of the software
- Quality of strategy
- Market conditions
- How you adjust your bot to these conditions
Make sure that the exchange strategies that a Bitcoin trading bot deploys are ideally aligned with your crypto trading goals. If you are a long-term trader, the bot should be able to deploy long-term strategies, and similarly, if you are a short-term trader, the bot should be effective in scalping or swing trading.
Bitcoin trading bots can be a great way to simplify the process of trading cryptocurrencies and make it more profitable. However, these tools are not for everyone and require a good amount of research.
If you are looking for immediate profits from the short-term trades, or you don’t want to spend time in setting up the strategies manually, then it will not work well for your requirements.
Considering that there is some risk with automated tools due to security concerns, and volatility of the market, do proper research before committing to the bot services.
All the major exchanges are plagued with trading bots, and they do offer significant advantages to the expert traders. If you want to learn more about Bitcoin trading bots, go through our website: www.Growlonix.com