A bot is a piece of software/computer program that automatically executes buy/sell trades for an asset by using various trends & analysis. It is AI for traders. They have been traditionally used in equity, currency & commodities market. But recently, it has entered Crypto-verse big time. So What is Crypto bot? How are they different from bots on other markets? Are they beneficial? We will try to answer these & some more to understand the necessary nuisance of a trading Crypto Bot. I am going to discuss everything in Q+A format to make it as easy as possible.
Let's get started.
Q - What is a Crypto Trading Bot?
A - A software program which executes cryptocurrency trades for you using trading strategy, which has been preset for it, by using an exchange's API (Application Programming Interface).
Q- How does a Crypto Bot work?
A - It automatically pulls the available date from an exchanges API & gives BUY/SELL command on your behalf to the exchange without any manual interference.
Q - Why to even use Bot when I can trade myself?
A - Because they are faster, always active, not emotional & won't need the experience/ time to learn. Lots of other reasons too.
Q - How are they different from bots on other markets?
A - As different as the crypto exchanges are to the stock or commodities market. So Crypto Bots are specifically designed to trade in Cryptocurrencies. Remember not all markets are 24*7 like crypto market & here is where they give an edge.
Q - Are they beneficial for us?
A - Its efficiency depends on the commands/ trading strategy set for it. If you plan to HODL or a beginner than maybe it's not for you. It benefits in removing emotional bias out of trading.
Q - How are they useful?
A - It's impossible for one to trade actively 24*7. The Crypto Bots can do exactly that for you. Even when you are asleep, they keep on checking the available trends & remain active continuously resulting in minimizing loss / increasing profits.
Q - Are they profitable for us?
A - You need a basic understanding of how the market moves to make the best use of these. It will be as profitable, as strong your trading strategy is.
Q - What are the known risk in using Crypto Bots?
A - Cryptos are known to very volatile & if you failed to adjust bots in time, they will go against the market resulting in loses. iT can take time & experience to use these Bots efficiently & profitably. They are still not advanced enough to prevent losses due to Faulty soft wares, Scams & Flash crashes.
Q - Are there free Crypto Bots available to try?
A - Most (not all) of the bots providers have a free trial option & these could be very useful (& recommended) before investing in buying paid/premium Bot services.
Q - Which are best available trading bots in the market?
A - Haasbot, 3Commas, Cryptohopper, CryptoTrader, Gunbot & Zenbot. There are plenty more, but these are all known & established.
I have tried to make this article very simple to explain the role of Crypto Trading Bots. Feel free to search & learn more about it.
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