Trading bots for trading: what is it, a list

A bot or robot is a program code that automatically performs actions according to predetermined conditions. Trading scripts are bought from popular bot developer services or written independently.

Cryptocurrency exchange bots make it easy for a trader to do routine work, and even perform analysis, so to some extent we can say that they are already endowed with artificial intelligence (AI). Relying completely on automatic analysis is not worth it, because your own money is at stake. 

The trading bot for the exchange saves all statistics in live mode, opens and closes orders, sends alerts to your phone about important events and new opportunities.

You can instruct him, for example, to buy Bitcoin 5% cheaper, and then place an order to sell it 10% more expensive, receiving a profit of 15%. And if the price never reaches the desired bar, keep the same amount of dollars. Or effectively close the order with stops if the BTC rate unexpectedly goes in the other direction. We are highly recommended to use coinbase trading bot to increase your income and save your time.

What can a trading bot do?

The main functions of bots for trading on the cryptocurrency exchange:

• Risk management is one of the main purposes of trading bots. You set the range in which the robot can operate and protect your balances. It uses volatility statistics and profitability indicators, automatically conducts risk management

• Buying and selling cryptocurrency - placing orders when the asset reaches the appointed price. It is no secret for large market participants that it is difficult to load a large volume position with market orders at a favorable price, and placing a large limit order in the order book is fraught with risks. The robot can buy up and dump the asset gradually. Small investors and speculators will also find application for the adviser.

• Multi-platform - connecting to several exchanges, the bot can trade on them, keeping one general account. So he finds better price offers, and the possibility of arbitrage opens.

• Logs and alerts - All actions are recorded in the database and can be displayed in a table or graph. Notifications about selected events are sent to the client, mail or Telegram.

• Market analysis - collecting information via API from several sources on selected assets. Saving them to the database, and then displaying them in a convenient form. Using machine learning algorithms to predict price movements. Correlation research.

Work principles

The software is recommended to be hosted on a dedicated server (VPS). This provides maximum response and round-the-clock uptime, unlike a home computer.

An example of using a ready-made bot for a cryptocurrency exchange: you need to register on the site of the creator of the robot, select a tariff plan, pay and download the software. Install it on a rented server.

In the personal account of the exchange, get an API key and open access for operations to the bot. You can block the ability to deposit and withdraw from your account to ensure that your digital assets are safe. The bot will only be able to buy and sell assets within the profile.

Using the interface, which is often oriented even for beginners, set the desired behavior scenario for the bot and start it up. Most often, trading scenarios are offered by the service itself or written independently.

Some developers offer fully automated robots for trading on a crypto exchange - they use artificial intelligence or copy trades of top traders, so you don't even need to invent your own scheme.

Types of bots for crypto exchanges

There are several service delivery models:

• One-time purchase - getting full functionality and further updates for a fixed fee.

• Subscription - access to the software for a limited period. You can rent a bot for a month and see if everything suits you, or pay for a year in advance and save a lot.

• Free or Shareware - Features may be limited in number or time. There are advertisements. To switch to full access, you need to buy the "Premium" version. An amateur, free exchange bot is less supported by developers, and may contain malware, viruses. Only use open source products that have been verified by the community if you are looking for a free bot.
• Individual - Trading robots have found recognition among professional traders for automating routine tasks and finding tools for a trading session. They are most often used in semi-automatic mode and are developed according to the trading strategy and style and to solve the problems of a particular trader.

Trading bot strategies for crypto exchanges

Depending on your resources and plans, you can choose software according to target capabilities.

Market making

The constant tiny difference between orders to buy and sell cryptocurrencies generates income for market makers. It is simply unrealistic to carry out such transactions manually, and high-frequency bots can serve the market around the clock. 

Each operation on the exchange removes a commission from the participants (on average 0.1%), therefore the scenario is suitable for traders with large capital or special service conditions (discount or 0% for transactions).

Arbitration

Each exchange has its own principles for depositing and withdrawing fiat, trading volume and supply level. An arbitrage bot for cryptocurrency exchanges finds areas of unfilled liquidity and generates income from price differences. He does not even need to transfer coins from one platform to another: the bot connects to several exchanges simultaneously via the API and calculates all transactions in a single database.

Portfolio rebalancing

By choosing preferred industries (for example:  Smart contracts ,  DeFi , NFT, Storage) or specific cryptocurrencies, the user can entrust the bot with automatic or semi-automatic diversification  of the investment portfolio . AI will find options to reduce investment risks and increase profitability. Transactions may be infrequent. Cryptobot reduces the amount of unrealized profit as a result of HODL-ing, only strengthening the position of a long-term holder.

Technical trading

This type of cryptocurrency trading bots is the most popular. They analyze and predict the market movement based on all possible factors: historical and implied  volatility , trading volume, correlation with competitors, even news and tweets.

Depending on the client's settings, such a bot will be engaged in scalping to reduce losses, or will carry out more risky operations, striving for a huge profit.