A bot is a special software that automates certain repetitive operations. The program helps the user to avoid monotonous actions. Bots for cryptocurrency exchanges allow trading on specialized exchanges using the predetermined algorithm.
Types of bots for cryptocurrency exchange. The simplest versions of trading bots buy a cryptocurrency when the value drops to a certain value, and sell it when it grows. Perfect software can take into account several additional parameters.
- market trading volumes
- the depth of the fall in value
- courses of other cryptocurrencies
Two types of boats are used on cryptocurrency exchanges:
- Trade. It works with the framework of one exchange, but can be configured for several currencies.
- Arbitration. It carries out trading on several exchanges at the same time, allowing you to earn due to exchange rate differences on different platforms.
Work algorithms of bots
A certain behavior strategy is needed to make a profit with the help of a bot. The user can independently set the set of operation parameters. For inexperienced traders, there are bots with built-in behavior strategies. Ready-made solutions may contain algorithms configured for specific exchanges or cryptocurrency pairs.
When choosing a specific software, it is necessary to pay attention to the number of configurable parameters, the more there are, the more complex the strategy can be implemented.
Trading bots are allowed on many cryptocurrency exchanges, including:
Automated trading occurs through the internal exchange API. it is recommended to check with the technical support of the trading platform the legitimacy of using automated programs before using the bot.
Where to get a bot for cryptocurrency exchange?
Any software can be obtained in the following ways:
- develop independently
- purchase from a developer company
- download the free version
Writing a trading bot program requires special knowledge. Two other options are available for most traders. When deciding to purchase software, it is recommended to study the reviews of real users, choose a developer company, only verified with an untarnished reputation.
Free software, available for download on the web, it needs to be treated more carefully. Trading bots may contain malicious code and, in the process, transfer all funds or some part to the purses of cybercriminals. In addition to direct damage, such bots can collect information about passwords, plastic card numbers, and other confidential user data.
Advantages and disadvantages of bots for cryptocurrency exchanges
Automation of the trading process on the cryptocurrency exchange has the following advantages:
- every day it possible to make transactions around the clock
- trade can be organized on several exchanges at the same time
- trading bots can carry out a huge number of transactions in a short period, which is especially true at the time of sharp jumps in the course, fast sending of trade orders,
- absence of mechanical errors, the program strictly adheres to a given algorithm
- decision making, there is no emotional component
You need to use bots carefully despite of the large number of positive qualities.
Cryptocurrency trading has its characteristics, based on automated programs have some disadvantages:
- the high volatility of cryptocurrencies doesn’t allow relying only on technical analysis
- even complex behavioral strategies work only in typical situations;
- a non-standard market situation can lead to large financial losses
- running program may freeze
- only programs written independently can be considered safe
You need programming knowledge and extensive practical experience in trading in financial markets for developing and write a good trading bot. Automated software for trading on the cryptocurrency exchange can serve as an additional tool for the trader, but not the main one.