March 18, 2022 - 16 min read
While many people who participate in the cryptocurrency market hold onto their assets long-term, there’s no doubt that the popularity of cryptocurrency trading has skyrocketed in recent years. In fact, on one day in May 2021, crypto trading volume was estimated to have peaked at $500 billion in one 24-hour period.
While most days never see this volume (and some crypto trading volume is artificially generated), high daily trading volumes mean that a substantial part of the entire crypto market is traded on a daily basis. Unlike stock, options, and traditional currency markets, crypto is traded 24/7. This makes it particularly challenging for individual, non-institutional traders to take advantage of market fluctuations to increase their profits.
Just like trading the stock market, trading crypto can be risky, and the challenges are often just as much psychological as technical, as the fear of avoiding loss and the greed inspired by potential gains can cloud the mind of even the most disciplined traders. However, a powerful solution has emerged to address both the issues of the 24/7 market and the frailties of human psychology: crypto trading bots.
In the traditional stock market, it’s estimated that around 70% of trading volume is automated, so, for industry insiders, it’s no surprise that automated trading is taking off in the crypto industry. Crypto trading bots generally function as APIs (automated programming interfaces), computer programs that directly connect to exchanges to execute trades on a trader’s behalf. Just like human traders, bot APIs can be used to traditionally trade coins and tokens, as well as to execute more complex crypto options and futures trading operations.
In this article, we’ll review what to look for in a crypto trading bot, as well as review some of the top crypto trading bots on the market today.
Before we address the particulars of crypto trading bots, it may be useful to review some of the most common investing and trading strategies and indicators. These strategies can be executed by both human traders and bots alike.
Some of the most common crypto trading strategies and indicators include:
Before choosing a crypto trading bot, there are a variety of aspects a trader should consider. Some of them include:
Crypto bot APIs typically work in three stages or function steps; the first stage involves the activation of the signal generator. The signal generator makes predictions and identifies potential trades based on the specifics of how its’ been programmed. To do this, it utilizes market data scanned from the exchanges that it interfaces with.
The second step in trade execution is risk allocation; most crypto trading bots are designed to minimize risk based on their programming, allocating various amounts of capital to trades with various potential risk profiles. Like the signal generation step, these risk allocations are set specifically by the programmer.
The third step is actually the execution of the trade. This occurs when trading signals are converted into API key requests, which are processed by the exchange itself.
Cryptohopper is perhaps the most popular crypto trading bot on the market today. It allows traders to work with a variety of digital assets, including Bitcoin, Ethereum, Litecoin, and many more. Cryptohopper provides a variety of free bot protocols and strategies, and according to reviewers, offers both a high level of security and a user-friendly interface. It is cloud-based and also offers iOS and Android mobile apps for trading on the go.
Cryptohopper offers four pricing models, including:
Pionex is another highly-popular crypto bot service that also functions as a fully-functioning crypto exchange. It provides 16 free trading bots and aggregates liquidity from Binance and Huobi global. Unlike some bots, it provides a leveraged grid bot with up to 5x leverage, particularly low fees of 0.05% per maker and taker trades. In addition, it provides spot-futures arbitrage, allowing traders to limit risk while maximizing potential returns.
Instead of charging users for the bots, the exchange/bot service only makes money from trading and withdrawal fees.
Bitsgap is a trading bot that specializes in analyzing crypto pairs, with 10,000+ pairs currently offered. It also offers a point-and-click bot creation service for ease of use. Bitsgap interfaces with a variety of exchanges including Binance, Bitfinex, Huobi, Kucoin, Kraken, Livecoin, Coinbene, Liquid, Gemini, and many others.
Bitsgap offers three pricing models, including:
3Commas is another trading bot option, which is specifically designed to reduce trading risk. It has more than 20 built-in trading indicators to make the platform easy to use, even for beginner traders. The system allows you to copy the settings of other traders’ bots, balance your portfolio via maintaining coin ratios, engage in backtesting, dollar-cost averaging, and a wide variety of signals. It also provides direct deal notification via a mobile app offered on iOS and Android, a browser app, and via email.
3Commas interfaces with a wide variety of exchanges including Coinbase Pro, Binance DEX, Binance, Binance.us, Bitfinex, Huobi Global, KuCoin, Kraken, and many others.
3commas offers four pricing options including:
CryptoHero is a free bot service designed for beginners and is known for its easy-to-use mobile app available for iOS and Android. It also has a browser-based version. CryptoHero features quick backtesting features, risk-free paper trading, technical indicators with presets, and easily allows users to track their investment and trading performance aggregated across multiple exchanges simultaneously. It also offers 24/7 technical support with real-time chat.
CryptoHero interfaces with exchanges including Coinbase Pro, FTX, Huobi, Binance, Kraken, Kucoin, Gate.IO, OKEx, and Bitfinex.
Quadency is not only a trading bot platform but also operates as a digital asset management application. The platform offers 1500+ digital assets, which gives it an edge over some other bot platforms on the list.
Unlike some other crypto trading bot options, Quadency is designed for both individual and institutional traders. Quadeny offers customizable bots, automated tools, social network trading charting, automated trading options, and excellent customer support. Also unlike many trading bot platforms, Quadency offers its own token, QUAD, which allows investors to stake and engage in yield farming for additional investment returns. Quadency claims that staking their token allows users to generate up to 64% APR.
Like many other bot platforms, Quadency currently has mobile apps for Android and iOS. The service has official relationships with Binance, Kucoin, and Bittrex, and also can interface with 10 other exchanges, including Kraken, Coinbase Pro, Gemini, Liquid, Bitfinex, Okex, AAX, HitBTC, Binance.US, and Poloniex. This means that it interfaces with far fewer exchanges than many other trading bots, which may be challenging for traders looking to engage in exchange arbitrage.
Quadency is currently free for all users and makes money only on trading fees.
Haasonline is yet another popular crypto bot option. The platform offers 16 standard bots, as well as 50+ technical indicators that allow traders to engage in more complex trading strategies. The platform offers programmable script bots that are written in C# and allows users to integrate backtesting with Discord (VoIP) and Telegram app.
Hassonline integrates with a variety of exchanges, including Gemini, Coinbase Pro Kraken, Kucoin, Huobi, FTX, Poloniex, Binance.US, Binance, Binance Futures, OKCoin, Bitfinex, BitMEX, Bitstamp, Bittrex, Bitpanda Pro, Bybit, OKEx, OKEx Futures, Derbit, CEX.IO, and HitBTC.
Haasonline is priced at 0.017 Bitcoin for three months of service.
Etoro is technically not a trading bot service, as it does not offer customizable bots or bots set with predefined strategies. However, Etoro is a major competitor to trading bot platforms as it allows traders to exactly copy the trading strategies of other traders on the platform. Some traders are highly regarded and have hundreds of thousands of followers and tens of thousands of traders copying their exact strategies.
This can be ideal for beginning traders, as they can identify the traders with the best historical performance and mirror their trades for a small fee. Unlike other options on this list, Etoro also allows users to trade stocks, indices, commodities, currenciews, and ETFs, though these non-crypto asset options are not available in the United States.
Etoro does not have account fees, but it does have trading fees, which vary for each cryptocurrency offered on the platform. These spreads, which cover both the buy and the sell, can be quite expensive and are often more than 1%. This is one of the major downsides of Etoro and may turn away some cost-conscious traders and investors.
For those who want to do things that traditional crypto trading bots cannot, there’s always the option of creating your own bot. Most crypto trading bots are created by experienced programmers who also deeply understand the crypto market. However, there are bot creation options for even the greenest of traders without any coding skills.
There are a variety of companies in the bot creation space but perhaps the most popular is Traility, a platform that allows both coders and non-coders to create custom crypto trading bots. For semi-experienced coders and non-coders, the company provides a “Rule Builder” that utilizes boolean logic by dragging and dropping trading indicators, as well as incorporating various pre-set strategies.
Boolean Logic is a unique, yet simple form of algebra that is centered around three simple phrases, “Or,” “And,” and “Not”, which are referred to as Boolean Operators. “Or” is utilized to express that as long as one of two or more conditions are met, a specific query is true. For example, a Boolean Logic-based stop loss and take profit portfolio rebalancing strategy could be set that if Bitcoin falls below $40,000 and “And” Ethereum rises above $4,000, the bot should buy sufficient Bitcoin to bring up the trader’s Bitcoin portfolio percentage to 20% while ensuring that the portfolio’s Ethereum portfolio percentage does not rise above 10%, selling Ethereum if necessary.
More experienced developers can take advantage of the company’s browser-based Python Bot Code Editor, which also allows for a variety of pre-set trading functions, debugging, and access to a wide variety of technical analysis indicators.
Traility has four pricing options, including:
Traility also offers bespoke options for enterprises or professional traders that may be able to incorporate more advanced features.
Actively trading any asset, whether crypto, stocks, bonds, commodities, or forex has inherent risks. It’s important to realize that just because you’re using a bot, it doesn’t make you a good trader. In general, non-professional traders should only trade with money they’re willing to lose and should educate themselves on a variety of strategies before putting any significant amount of money in the market. It’s often a great idea for beginning crypto traders to engage in paper trading (trading without real money) first in order to test their strategies, as well as to engage in backtesting their potential trading strategies. It can also be a good idea to model your trading off of other successful investors, which platforms like Etoro easily allow you to do.
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