What are Bitcoin trading bots?
Generally, trading bots are computer run programs that use market indicators to learn about trends in the industry and then automatically execute trades. It is important to note that trading bots for private investments were first used in foreign exchange markets but have made their way into the cryptocurrency market also with Bitcoin trading bots leading the way.
Bitcoin trading bots continue to be of much value as more bitcoin traders engage in Bitcoin trade as a passive activity; hence they don’t dedicate much of their time in the business.
Traders most often use these bitcoin trading bots for market analysis and rely on them for trade decisions on their behalf. As a result, Bitcoin traders do not need to stay on top of trends and matters affecting the cryptocurrency market.
Types of Bitcoin bot trading strategies
The cryptocurrency market has not grown as much compared to other financial markets, but the market has been able to come up with some powerful Bitcoin trading bots for users just like with other traditional financial markets. Trading bots have allowed investors to get access to numerous trading strategies which are vital in the success of cryptocurrency trading.
Below are the two most popular strategies.
This strategy was prevalent in the early days of cryptocurrency trading. Arbitrage is where one buys assets from a given market at a certain price and then sells the assets to another market at a higher price. During the early days, the prices at almost all cryptocurrency exchanges were highly different from each other which created room for differences in rates in different exchanges. People could make profits through arbitrages.
In the current market, the price differences are minimal but still do exist. The trading bots can quickly identify them and make profits out of them.
Bitcoin trading bots allow traders to make use of the market creation strategy. The market making strategy allows the continuous purchase and sale prices on different spot digital currencies and derivatives contracts with the aim of making use of the difference between the buying and selling price.
For the market making strategy to be a success, the buy and sell limit orders are made near an existing market place. The Bitcoin trading bot then automatically and continuously place orders for it to make profits out of the market spread.
The competition around this strategy is quite intense making it less profitable at times especially when there is a low distribution of cash in the market.
The best bitcoin trading bots in the market
As the crypto market continues to evolve, new and better bitcoin trading tools are also being developed. As for trading bots, developers are continually creating bitcoin trading bots to serve the vast crypto market. Below is a list of the popular bitcoin trading bots.
Gekko is quite popular among bitcoin traders as it allows its users to backtest and automatically execute trading strategies. Gekko developers are continually making updates on this bot so that it can improve on functionality. Gekko has been in the market for more than five years now and can be downloaded via GitHub.
Gunbot allows bitcoin traders to develop and execute bitcoin trading strategies. It also offers plug-and-play strategies for traders that do not wish to create new trading strategies. Gunbot has been in the industry for two complete years.
This bitcoin trading bot provides a web-based trading platform through which traders can view and execute available trading strategies. This bitcoin bot also offers a copy trading feature that allows crypto traders to copy trading strategies of other traders in the market.
It is important to note that this bitcoin trading bot is by far the most popular bot in the bitcoin trading market. Haasbot gives traders the chance to create, test and execute both advanced and simple trading strategies. Another important feature found of this bot is that it allows exchange arbitrage and has risk management possibilities.
Zenbot is one of the few free open source Bitcoin trading bots available out there for traders. It enables its users to backtest, develop and deploy trading strategies at no cost. The trading bot also supports other digital currencies apart from bitcoin and supports execution of high-frequency trades. It has been in the market for more than two years.
This bitcoin trading bot is cloud-based, and it allows the combination of technical indicators for the creation of an automatically executable trading strategy. Cryptohopper also enables users to backtest.
Autonio is still new in the bitcoin trading bot market. The bot refers to itself as the first ‘’ decentralized AI trading application for cryptocurrencies’’. Both retail and professional traders can use them. The bot makes use of pre-determined technical indicators to create trading strategies that can be automatically executed.
CryptoTrader is also cloud-based bot which enables traders to create, backtest and execute technical indicator-based strategies. You can also buy and sell bitcoins on the CryptoTrader market place.
The Zignaly trading bot is the newest in the market, and you can make use of its beta version at no cost. Zignaly allows users to execute trading strategies on Binance via API.
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