Today, the market offers numerous crypto trading strategies and software solutions to help both newcomers and experienced investors get more from their crypto trading activities. When preparing for crypto trading, it would be helpful to clearly understand your targets, avoid FOMO, conduct a technical or fundamental analysis, be aware of what is going on in the industry by reading the latest news, and practice on demo accounts, to say the least.
Diversification of your portfolio and risk management are crucial when it comes to any investment. First of all, it is necessary to develop a sustainable plan and never engage in trading without clear profit goals. This would help prevent losses that may be caused by a sudden trend reverse.
Manual trading is a melting pot of physical and financial efforts. Channeling these efforts into day trading may be even more exhausting and mentally draining. Crypto enthusiasts who do not want to actively trade on their own and monitor the market round-the-clock, in order not to miss a profitable trade, would rather prefer to adopt an invest-and-sit-back approach.
How do crypto trading bots operate?
Essentially, trading bots bear the brunt of your trading activities, which means they do the dirty work of sorting the most promising investment product for you. All you are required to do is to load your trading account with an amount of your choice. Trading bot users only have to pre-determine their trading range, sit back, and let the algorithms do the rest.
As long as the asset remains within the range, the trading bots continually trade until the price of the asset moves out from that range or a trader manually shuts them down. Traders still have to do research on the coin, so that they can adopt a position. Once they do all this, they have to set up a trading range, then bots carry out the remaining activities.
Investing without research may result in a loss of funds. Whether you are hunting for fast cash or looking for stable long-term returns, all of these activities require significant input. So what are the things to look out for while searching for a profitable crypto trading bot?
Things to Consider When Choosing a Trading Bot
Every crypto trader’s aim is to make stable returns, and automated trading platforms may be a great option to consider. Still, there are dozens of trading bots on the market and not all of them are equally effective.
Traders interested in benefiting from automated trading platforms need to identify which of them suit their needs best. Bitsgap, Bituniverse, and 3Commas are among the most acknowledged by crypto investors. Whether you are choosing among these three or consider any other automated platform, there are several factors to take into account.
The main purpose of automated bots is to make returns from user investments and save time. To fulfill that purpose, they require proper settings, including a price range to trade, number of grids per bot and preferred grid step.
Some trading bots may utilize extremely unfriendly and complex interfaces overloaded with data. This may be confusing and result in making wrong decisions and set you back by thousands of dollars.
Hidden Commissions and Trading Fees
The next important step is to identify whether it charges any hidden commissions on top of the exchanges’ fees and whether the system takes them into account when calculating profits. Exorbitant fees are always a serious red flag.
It may be worth considering a platform with a monthly subscription, like the one offered by Bitsgap rather than use platforms that do not require to purchase subscription plans but charge up to 50% commissions instead.
Some trading bots may seem more profitable than others, but they may have a sufficient flaw — the lack of supported exchanges. For example, Pionex trading bot may seem efficient, but it is tied to a like-named exchange, while Bitsgap supports 25 exchanges and enables its users to profit from the price difference of the same assets on different trading platforms.
This would have come first, but let’s save the best for the last. Automated bots generally utilize application programming interface (API) keys. While some trading bots require full access to your account, including making withdrawals without any confirmation from your side, most trusted solutions require only those functions that are essential to trade on the user’s behalf.
Bitsgap has no right to withdraw funds from users’ accounts or operate other assets, apart from those assigned to trading bots. Make sure that you choose a trading platform that upholds encryption and other security protocols, in order to protect sensitive data from hacks and fraudulent activities.