As cryptocurrencies become more and more mainstream as an alternative investment driver and payment mode, a large number of traders have started to use them for trading purposes.
While the manual or conventional way of trading digital assets is more common, a new and more convenient tool has recently become available, a crypto trading bot. It is an automated crypto trading algorithm that buys and sells cryptocurrencies on behalf of the user so they don’t have to deal with the hassle of trading at all. This article talks about the best crypto trading bots in 2021.
Compare the Best Crypto Trading Bots
Although there is a huge variety of crypto trading bots available, not every bot is reliable and offers the features that make trading easy. This guide will list some of the most popular trading bots along with their features and advantages so you can make an informed decision.
Understanding Crypto Trading Bots
Trading bots are automated cryptocurrency programs that are powered by a smart algorithm with a built-in capability of identifying temporary opportunities of earning profit and entering and exiting trade positions dependent on criteria specified by the user. This enables traders to eliminate two major issues associated with manual trading—the requirement for extensive learning and research and exceptionally quick execution of trade positions. This allows technologically non-savvy individuals who don't have a lot of expertise and experience in terms of crypto trading to trade cryptocurrencies of their choice.
The best crypto trading bots come with a user-friendly interface and all users need to do is define the parameters and trading instructions, restrictions, and preferences according to their trading strategy. A trading bot carries out comprehensive information analysis on your behalf and opens and exits positions with exceptionally high precision and accuracy. It doesn't matter how quick your reflexes are, it is going to be impossible for you to make decisions and execute them within milliseconds. That's where a trading robot gets the job done relying on its backend algorithm.
To start, you need to subscribe to a trading bot platform before you start your journey as a crypto trader. It is usually a three-step process.
- Sign Up – The first thing you need to do is sign up on your preferred trading bot platform. At this stage, you will be required to provide some of your basic personal information including your first and last name, contact number, residence address, and email. You will also need to verify your identity by providing a piece of legal documentation such as a driver's license or a utility bill. This step is enforced by trading bot services to ensure compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations that allows a safe and secure trading environment.
- Deposit Your Funds – After you have gone through the signing up and verification process, you will be asked to put in a minimum deposit before you can start trading. Note that different crypto bots have different deposit limits and you can find the one that fits your budget.
- Start Trading – Once you have deposited your minimum trading capital, you can start trading your preferred cryptocurrencies. It is advised that you make yourself familiar with all the features of the bot and begin with small deposits initially. Make sure that you are managing your risk and don’t put more money than you can afford to lose.
How to Choose a Crypto Trading Bot?
Before you pick a crypto trading bot, you should consider several factors. Evaluate the below-mentioned variables of the bot before you start trading.
- Trading Costs – Although most of the crypto trading bots don’t take any commissions or spreads, you have to ensure that there are no hidden fees or charges that will eat into your profit margins. If there are any costs, you should be aware of them upfront.
- User-Friendly – Choose a platform that you can easily learn to use over a long period. A trading bot that doesn’t have a user-friendly and intuitive UI will become frustrating to use in the long run leading to a subpar trading experience.
- Payment Modes - Another key variable that you should always consider is the accessibility of a variety of payment methods. Make sure that you are picking an affordable, quick, and easy payment mode so you are in a position to deposit and withdraw your funds easily.
- Accurate Smart Algorithm – Since trading bots rely on algorithms to execute trades and analyse data, ensure that you are going for a bot that offers the best service in terms of assessing charts, data, and price movements along with executing trades with pinpoint accuracy.
- Customer Service – Many trading bots don’t offer any communication channel to their users which can be quite frustrating if you run into a problem. Always choose a crypto trading bot that features responsive customer service.
- Regulatory Compliance – One more aspect of choosing a crypto bot is ensuring the trading platform complies with the KYC and AML regulations. This will keep your data as well as funds safe and secure.
Advantages & Disadvantages of Using Crypto Trading Bots
Are Crypto Trading Bots Safe?
A large number of crypto trading bots comply with both KYC and AML regulations to provide a safe and secure trading environment for their users. Moreover, all the data is sent and received through an end-to-end encrypted connection ensuring that there’s no interference or data breach that can lead to any potential losses.
3 Steps to Using a Crypto Trading Bot
Step 1: Choose a Crypto Trading Bot
Relying on the factors mentioned earlier, you need to choose a crypto trading robot that complies with your trading requirements. Find a bot that offers the right balance of reliability, security, returns and affordability. You should also consider the fees associated with the platform before selecting one to use.
Step 2: Signing up/Setting up Crypto Trading Bot
The second phase for using a trading robot is to sign up on the bot platform and verify your identity for security purposes. After you have gone through the verification process, you will need to submit a minimum deposit into your account which will act as seed capital for trading.
Step 3: Start using Crypto Trading Bot
Once you have deposited your trading capital, you are ready to start trading. It is recommended that you start with small amounts initially. Apart from that, it is a good idea to spread your invested capital across multiple trades. This strategy will help you in reducing your risk.
When all you want is to trade in an automated manner without having to deal with the issues of manual trading, a crypto trading bot comes in handy. It gives you the ease of automated trading while doing the leg work for you. From executing orders with precision to carrying out data analysis, everything is done on your behalf while reducing the need for user input.
Frequently Asked Questions
Not right away. It is not ideal to quit your day job or primary income source when you start trading. You will need to develop a deep understanding of the market and gain experience before you can make enough money to support yourself just through crypto trading.
While trading experience and crypto knowledge are a plus, they are not compulsory and even amateur traders can use trading bots.
24 to 48 hours. Usually, you need to submit a withdrawal form that initiates payment processing at the backend.
Most of the bots do. You can contact customer care and find the answers you are looking for and get your concerns addressed.
It depends on the amount of capital you invest along with your investment strategy.
Trading bots mostly rely on contemporary security measures like two-factor authentication and SSL encryption to prevent any security breaches.
Less than an hour. You just need to define your parameters, restrictions, and trading preferences and the bot will do the rest. You should just check now and then to ensure the bot is working according to your instructions.
You can minimize your risk by investing your capital across multiple trades instead of putting the entirety of your investment money in a single trade.