‹ Back

Crypto Trading Bots: What They Are, How They Work And 6 Best Examples

 

By Reel Coverage Nov 15, 2023

 

Crypto trading bots are computer programs that run autonomously, trading various crypto assets and currencies for profit.

 

 

 

With the complexity of trading and its time and resource inefficiency, crypto trading bots are an employed strategy to attain close to guaranteed profits in crypto trading and effective time and resource management. 

 

 

Understanding Crypto Trading Bots

 

Crypto trading bots are invaluable software that enhances crypto trading profitability through learned and trained strategies. Many traders opt for trading bots for their time efficiency and higher profitability than manual day-trading practices. 

 

The advent of smart technologies like artificial intelligence has brought higher relevance and value to crypto trading bots as these bots adopt AI software to train their system to trade better with historical data. 

 

With over 751,222 traders, crypto trading bots like Cryptohopper offer AI solutions for crypto traders to leverage and enhance their trading profitability in addition to signals and a marketplace for strategies from free to paid options for new traders to kickstart. 

 

How Do Crypto Trading Bots Work?

 

Crypto trading bots work by employing several trading strategies defined by traders to maximize profits. Said strategies can be unique to each trader or could be a copied strategy from professional traders in marketplaces.

 

By following defined strategies set by traders, the system can attain the utmost profitability and maintain trade predictability that ensures proper resource management and avoidance of emotion-influenced trade outcomes. 

 

With most successful traders considered to be individuals who can keep their emotions in check or institutions, crypto trading bots are a fancy option for otherwise incapable individuals or institutions to attain profitability in trading crypto assets. 

 

A simple representation of how crypto trading bots work in their basic form is:

 

Defined Trading Strategies - Communications With Crypto Markets Via APIs - Monitoring For Defined Trading Parameters - Execution Of Trades. 

 

And the process continues on repeat. 

 

While a trader needs to have some basic programming and technical skills to effectively use most crypto trading bots, crypto trading bots are actively evolving with options like Cryptohopper making it as simple as possible to go from signing up to running an active bot trading for profit.

 

Various crypto bots function basically by connecting to the Application Programming Interface(API) of crypto exchanges to effectively watch crypto market movements for trade executions. APIs enable bots to view the markets in real-time and push various trade executions onto connected exchange accounts. 

 

Another importance of exchange APIs is their enablement of trading bots to autonomously manage traders' portfolios, opening and closing trades with assets present in the account as defined by trading parameters or strategies deployed to the bot. 

 

Types Of Crypto Trading Bots

 

There are various types of crypto trading bots and the majority earn their name from the various trading strategies they employ for trade executions. 

 

The most common types of crypto trading bots include:

 

● Arbitrage Bots: Arbitrage Bots leverage price differences from one asset or various crypto assets in the same exchange or across multiple exchanges for profit. This typically includes buying specific crypto assets where it's low and selling off where it's higher for a profit. 

 

Arbitrage trading is generally considered the most low-risk crypto trading method as though executions are instant thus involving minimal risks. 

 

● Trend Following Bots: Trend following bots watch over momentums in the crypto market for trading. Trend-following bots often trade on "assumptions-specific" algorithms that trigger trade executions based on observed market movement on the note that a trend may continue or reverse. 

 

● Scalping Bots: Scalping bots aim to profit from crypto markets by making quick trades using technical analysis to determine short-term opportunities in the market. 

 

● Market-Making Bots: Market-making bots deepen liquidity in trading pools and order books, leveraging the spreads between trades for quick profits. 

 

● AI Crypto Trading Bots: While AI crypto trading bots are not "Market-Specific or Official Trading Bots Types", various new and advanced bot systems leverage artificial intelligence to effectively analyse market data and make informed trading decisions. 

 

These bots are often pro-users specifically and come with an array of benefits absent in basic bot programs. 

 

Advantages Of Crypto Trading Bots 

 

There are various advantages or benefits of using crypto trading bots and they include the following:

 

● Elimination Of Human Emotions: The strongest force of failed trading practices has human emotions to blame. When traders are unable to keep their emotions in check, they effectively abandon trading focus and strategies to chase various assumptions as markets fluctuate. Crypto trading bots eliminate these human emotions from trades as they function by numbers defined by their program. 

 

● Speed And Efficiency: With a 24/7 active market with billions of dollars moving in and out, crypto trading requires speed and a great amount of energy. This, is quite something humans possess at a very limited rate, thus, the fallback on crypto trading bots that can execute trades in milliseconds and run 24/7 round the clock is a viable option and a primary advantage of crypto trading bots. 

 

● Accuracy And Predictability: Crypto trading bots as aforementioned function on predefined rules, strategies or algorithms, this makes their trading practices highly accurate and predictable. 

 

Although profit or loss in trading is not predictable, there are far closer to accurate assumptions of trade outcomes when trading bots are leveraged compared to manual day-trading practices by individuals. 

 

● Faster Analysis And Improved Trading: Crypto trading bots leveraging artificial intelligence software can analyse market data at a faster pace and have a high learning and trade improvement rate compared to humans. This edge over humans makes individuals or institutions leverage autonomously operation systems(trading bots) to trade the market experience higher trade profitability and maintain minimal losses as risks are reduced to defined parameters in deployed trading strategies.
 

6 Examples Of Industry Best Crypto Trading Bots

 

1. Cryptohopper

 

Cost: $29 - $129 monthly - Free Plan Available With Annual Plan Discounts

 

Users: 751,222+

 

Supported Exchanges: 16+ include Binance, Coinbase, Okex, Kucoin and Bitfinex. 

 

Payment Methods: PayPal, MasterCard, Visa, American, Express, Discover, iDeal, Sofort banking, Sofort, Bancontact, Przelewy24, Bank transfers, BitPay (multiple cryptocurrencies supported), Bitcoin payments, Litecoin payments, Apple payments, Google payments. 

 

Crytohopper is a widely leveraged crypto trading bot in the crypto industry. Loved primarily for its simplicity yet feature-rich reality, from basic bots to AI-powered crypto bots, Cryptohopper enables beginners to professional crypto traders to effectively maximize trading profits in the cryptocurrency market. 

 

VISIT CRYPTOHOPPER

 

2. Bitsgap

 

Cost: $29 - $149 monthly with up to 20% annual discounts plus a 7-day free trial. 

 

Users: 500,000+

 

Supported Exchanges: 15+ popular exchanges including Binance, Okex, Kucoin, and Bybit. 

 

Payment Methods: Visa, Master Card, PayPal, Bitcoin, Ethereum, Litecoin and 50+ altcoins. 

 

With over $300 billion already traded and 3.7 million bots started on Bitgaps, the crypto trading bot service prides itself as one of the industry leaders in the field with case study reports outlining profits of up to $45,000 in 43 days. 

 

VISIT BITSGAP

 

3. 3Commas

 

Cost: $5 - $79 monthly with annual discounts and demo trading account. 

 

Users: 220,000+

 

Supported Exchanges: 15+ popular exchanges including Binance, Coinbase, Bybit, Okex and Bitfinex. 

 

Payment Methods: Google Pay, Apple Pay, Visa, Master Card, PayPal, Bitcoin, USDT, and BUSD. 

 

With a 31.41% Bots Presets profits reported last month, 3Commas is a beginner-friendly crypto trading bot that offers flexible trading strategies across various exchanges and crypto assets markets. 

 

VISIT 3COMMAS

 

4. Coinrule

 

Cost: $19.95 - 249.95 monthly with annual discounts of up to 25% and a free starter account. 

 

Users: 130,000+

 

Supported Exchanges: 10+ popular exchanges including Binance, Coinbase, Kucoin, Kraken, etc. 

 

Payment Methods: Crypto payments are accepted. 

 

Coinrule crypto trading bot is estimated to deliver up to 20% ROI monthly with as high as 80% ROI strategies on the marketplace. 

 

VISIT COINRULE

 

5. Tradesanta

 

Cost: $25 - $90 up to 28% off annual package 

 

Users: 127,000+

 

Supported Exchanges: 9+ popular exchanges including Binance, Coinbase and Okex. 

 

Payment Methods: Visa, Master Card, American Express, Bitcoin, USDT, Ethereum, BUSD and USDC. 

 

Operational since 2018, Tradesanta enables thousands of beginners and pro-traders to maximize profit-making on the crypto markets via autonomously operating, risk managing and value-targeted trading bots. 

 

VISIT TRADESANTA

 

6. Wundertrading

 

Cost: $4.95 - $89.95 up to 30% discount on annual plans with a starter free account. 

 

Users: 80,000+

 

Supported Exchanges: 14+ popular exchanges including Binance, Okex, Bybit, MEXC Global and Kucoin. 

 

Payment Methods: Visa or MasterCard, PayPal, Crypto (10+), Apple Pay, and Google Pay.

 

With up to $320 million in monthly trading volume across over 12,000 active trading bots, the Wundertrading platform offers a feature-rich autonomous trading experience with its bot software. 

 

VISIT WUNDERTRADING

 

Key Features And Things To Look Out For When Choosing A Crypto Trading Bot

 

Choosing the bot that suits your needs is crucial to maximally profit from your trading journey. As such, it is important to look at key features to determine its suitability and some security lookouts for safe practices. 

 

The following are features and things traders need to look for and examine when choosing a crypto trading bot:

 

● Customization Options: The more customizable or flexible your trading bot is, the more strategies and effectively higher profits you can make. 

 

The customization options of a trading bot typically make up the bot and set it aside from its alternatives, all of which can typically be found on the pricing page of the crypto trading bot platform well defined under each subscription plan. 

 

● User Interface: While this doesn't directly affect the trading outcomes, nothing beats a well-designed interface when it comes to the usability of a platform. The more optimized for user-friendliness a platform's interface is, the more efficient its user can work with it. 

 

● Security: It is important to review the security of each trading bot by reviewing the platform's security practices and counter-exploitation measures put in place. 

 

● Reviews: What's a better way to learn about something you're about to use than view public users' reviews? That's right! Reputable crypto trading bot platforms that mean business often have these reviews live on their websites with links to the sources for its users to learn about other's views on their services. 

 

● Competitors Offers And Trial Periods: For those looking to effectively manage their resources and pay for the best service, it is important to review offers across different trading bots services to determine the most suitable in terms of pricing, trial periods, refund policy and other added benefits where applicable. 

 

Challenges Of Crypto Trading Bots 

 

No system is without a flaw, when it comes to crypto trading bots, whilst they eliminate human emotions and enhance trading efficiency and profits, challenges or setbacks include risks of bots going offline leaving trades not executed, the requirements of some technical knowledge in some cases and the exposure of one's crypto wealth to these crypto trading bots. 

 

These challenges make relevance the application of due diligence before choosing and using a trading bot to maintain a reasonable margin between profits and wealth risks. 

 

The Bottom Line 

 

The world of crypto trading via autonomously functioning bots offers dynamic opportunities with inherent risks. As we've explored the fundamental concepts, types, advantages, and challenges, it becomes clear that these automated tools can significantly enhance trading strategies and profits provided users approach them with a well-informed mindset.

 

It is crucial for users to prioritize security and exercise prudent risk management. While success stories underscore the potential rewards, they don't guarantee future results but can serve as a building block for future strategy deployment. 

 

In navigating this exciting realm, continuous learning and adaptation are key. The top 6 crypto trading bots presented here should serve as a starting point for exploration, but users are encouraged to delve deeper, experiment cautiously, and actively participate in the evolving landscape of crypto trading automation.