CRYPTOCURRENCY TRADING BOTS: BEGINNERS GUIDE

We have prepared a detailed guide for beginners of using crypto bots: what are cryptocurrency bots, types of bots for trading cryptocurrency, factors for choosing a bot and is it worth buying a cryptobot for a beginner.
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What is a crypto bot?

A cryptocurrency bot is a program code for automated trading. The robot fulfills the conditions predefined by the user. Bots are used to free the trader from monotonous mechanical work. They are often viewed as tools for earning passive income.

Types of bots for crypto trading

There are several types of cryptocurrency bots. Let's start with the most common ones:

1. Simple trading bots. They act within the framework of a preset strategy and make a decision to buy/sell an asset based on technical analysis indicators.
2. Advanced bots. Robots without a preset strategy or partially customized. Their functionality allows the trader to independently customize the strategy.
3. Script bots. Open source cryptocurrency bots. Require programming skills from the trader.
4. Signals bots. These bots do not perform trading operations. They collect data from various sources and form “sell or buy” trading recommendations.

Consider the less common types of cryptocurrency trading bots. Including:

1. Arbitration bots. They work on the price difference between exchanges or between trading pairs. The more arbitrage robots of the same type on the market, the lower their efficiency. Therefore, it is almost impossible to find high-quality arbitration robots in the public domain.
2. Statistical arbitration. Robots analyze the market looking for undervalued and overvalued cryptocurrencies. Their task is to identify the patterns of different coins and determine the correlation between them. Typically, these cryptocurrency bots are used by hedge funds and are not available to ordinary traders.

There are also market maker bots. They create market liquidity by placing orders in both directions of the order book (order books) - for buying and selling. These bots are designed to work with large volumes.

How to choose a crypto bot

Choosing a quality bot for cryptocurrency trading is a difficult task. First, it should be borne in mind that there are many malicious developments on the market. Secondly, you need to understand that strategy can’t guarantee stable earnings. Some bots trade profitably in a bear market, others in a bull market. The trader must constantly monitor the bot's work, make adjustments to the settings, taking into account market movements.

If the developers promise a stable profit, check all the working conditions of the bot and study the feedback of the bot. As a rule, such algorithms are based on two indicators. A cryptocurrency bot that performs trading operations based on a pair of indicators will never bring stable income. In the worst case, he can go into a serious minus or completely drain the deposit.

Does a newbie need a bot to trade cryptocurrency?

A beginner should understand that there are no stable cryptocurrency autonomous bots earning stable income. The idea of ​​"fire and forget" does not work - there is no easy money. A trader must be able to set up a trading robot or write algorithmic strategies on his own. Only then can he create a profitable strategy.

Without trading experience and understanding of the market mechanisms, a novice trader will not be able to create an effective strategy. Using pre-installed cryptocurrency bots, a beginner runs the risk of losing his deposit. First of all, you need to learn how to trade on your own. Then you can use bots to download from routine actions and diversify risks.

Conclusion

Cryptocurrency bots facilitate the trading process, but they do not guarantee stable profits. Good trading robots require customization. To do this, the trader must understand the market mechanisms, which comes with experience. One theory is not enough to effectively launch a bot. If a trader wants to make money on cryptobots, he must learn to trade on his own, without the help of algorithms. With experience and understanding of the market, you can move on to cryptocurrency bots.

You will find crypto bots in our list here.

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