Time does not wait for anyone, and financial markets are the same, especially when discussing cryptocurrency trading. Therefore it is essential to have a reliable, safe, and carefully calibrated strategy. Cryptocurrency never stops like a traditional stock market. Thus private traders can’t track the market fluctuations, alter risk, minimize errors and ensure trading discipline 24 hours a day. Unless you have some help, that is where crypto trading bots play their role.
What are Crypto Trading Bots?
Crypto trading bots are programs designed to automatize cryptocurrency trading on your behalf. As an investor, you will have to pay proper attention to the market statistics. It plays an essential role in practicing trading and picking a cryptocurrency to purchase or sell and at what time.
Crypto trading bots can quickly automatize the analysis and interpretation of market statistics. They collect data from the market, interpret it, calculate the market risks and execute the buying or selling of assets. It is similar to hiring an expert to perform crypto trading for you while you sit and watch the profit growth.
Types of Bots
There are several cryptocurrency bots, but the most popular is the arbitrage bot. It is a tool that checks the prices across exchanges and does trading to take advantage of errors. The cost of cryptocurrency like Bitcoin often varies from exchange to exchange. So, bots that can move fast enough beats the exchanges that delay their price updates.
Other bots use historical price data to test the trading strategies offering investors a leg up. Still, other bot’s programming makes them execute trades at certain signals like price or trading volume.
Benefits of Crypto Trading Bots
Here are some advantages of crypto trading bots:
There is a certain limit to the data amount a trader can process at a time. Moreover, even if you process all the data, it is challenging to seek insights based on such data. However, crypto trading bots can easily handle such tasks and reach feasible conclusions.
Trading cryptocurrency using bots is considerably more efficient. You don’t need to worry about delays and human errors. Once the bot receives correct data, it can trade assets 24×7 with more profit.
The crypto trading bot makes every decision based on perceptions. But, unlike humans, it does not fear loss and greed for profit. Experienced traders may make wise decisions by overpowering their emotions, but it may not always be the same. On the other hand, the trading bot always keeps the emotions equation far away and crypto forecast smartly.
5 Steps to Build a Crypto Bot
Before you continue to build your crypto trading bot, realize what you want to create is a marketplace or a constructor. The following are some steps to create a crypto bot:
Step 1: Discovery
Start with defining an ICP (ideal customer profile.) There are two main targets for crypto projects: Novice and Pro traders. It would be best to decide which group of users the crypto bot will serve. Then, based on that group, you can prioritize features picking those with immediate impact on ROI goals.
Step 2: Design
First, prepare the user interface and work through the product experience. Then, start jotting down user journey points and predicting the minimum number of steps the user should take to achieve the goals.
Step 3: Development
After design verification, continue coding. While making a cryptocurrency bot, code a few things like:
- front end for consumers
- back-end with trading algorithms
- admin portal
Step 4: Testing
Testing a trading bot is not trivial. First, no one prefers losing funds while running QA rounds. Second, a bot working with a decentralized crypto exchange requires attention.
Step 5: Deployment and Maintenance
Deployment means moving the server-based software to the cloud’s live production environment, already stress-tested. Maintenance implies keeping the software up-to-date. With time, you need to include new features, fix problems, comply with the latest updates, etc.
Are Crypto Trading Bots Worth It?
It depends on various factors like trading experience, time for manual trading, and portfolio size. A crypto trading bot is a great way to learn the ropes if you are a beginner. They can allow you to make informed decisions and avoid making costly mistakes.