Beginner’s Guide to Bitcoin Trading Bots

Soon after crypto exchanges popped up, robots began to appear on them. It’s worth to say that they are more often called bots for trade in cryptocurrency. Their emergence was predictable. With the growth of bitcoin on crypto exchanges, a large number of inexperienced traders decided to try waters in this business. Very often they could not work with analytical tools and simply tried to buy currencies at a low price and sell at high prices. Not always these attempts were successful, so time and nerves were wasted a lot. However, all steps seemed to be not sophisticated and it became obvious: simple software will cope with them quite well. Moreover, there are similar programs on stock markets for a long time.

Bots for trading cryptocurrency and their types

In a virtual world, a bot is a program that is configured to perform repetitive actions. It is written in order to save a person from mechanical, monotonous work, and basically, save this person’s time a lot. To say it briefly, trading bots are set to bargain mechanically on stock exchanges according to given parameters.

The simplest bots, most of them, buy crypto-currencies at a rate drop and sell at growth. More complicated ones use a number of additional data and place orders only if these data are consistent with those indicated by the owner.

Here are two types of bots in this industry:

  • Trading bots operate within one exchange and type of electronic currency, receiving income as a result of margin between two prices.
  • Arbitration bots trade within several exchanges, receiving income as a result of buying currency on the exchange, where the rate is lower, and selling on another exchange, where the rate is higher.

Welcome to crypto world!

Robots on crypto-exchanges always work according to the strategy. Namely this is a set of parameters specially developed for trading. Sometimes it is manually set by the owner or integrated into the program by the trader.

The simplest are the bot settings, the less you can influence the strategy. Accordingly, the more such parameters, the more profitable the robot can be in the hands of an experienced trader. But there is another side to the coin: if a market player is inexperienced, a large number of parameters can confuse him, and he will set such indicators that the whole endeavour will be unprofitable.

Therefore, there are many recommendations from professionals, and variants of strategies specially designed for freshmen. There are some online games that imitate stock market processes, or software developed for certain pairs of cryptocurrencies, and so on. Just try to make sense of this.

Whether or not

One of the frequent questions is: can they ban for a bot? There are many opinions and rules. Nevertheless, on the most exchanges they are not prohibited – in particular, on Bittrex or EXMO. Just in case, however, this issue should be addressed to the customer support. Please clarify these aspects in advance before starting the operations.