Crypto Robots

What are Cryptocurrency Trading Robots

Crypt Trading Robots Review |
Crypt Trading Robots Review |

Introduction to Automated Trading

In the traditional investment world, over the last two decades we have seen a drastic increase in so-called quant funds, investment firms that rely on computers and trading algorithms to do trading. By many, these investment firms are seen as an elite special force among the army of traditional investment managers. Such quant funds are usually very secretive and stay super low profile avoiding the public attention. Such funds are often run by people with a scientific background, such as mathematics, physics or computer science, rather than finance. The most famous quantitative fund is Renaissance Technologies LLC, an American hedge-fund founded my mathematician James Simons. The company was founded in 1982 and specialises in systematic trading using quantitative models derived from mathematical and statistical analysis. Renaissance’s flagship Medallion  Fund has one of the best records in investment history returning more than 35% annualised to its investors over a 20-year span. And from 1994 to mid-2015 Renaissance’s investment strategies averaged a staggering 71% annualised return. Needless to say, that such success attracted many investors into algorithmic trading space and now quant funds are managing around $712 billion. But, of course, not all of these funds had a great performance but the quest in creating the best trading algorithms still continues. Our readers might think, so what Cryptocurrency Trading Robots have to do with it? Well, this is where it all started and with the latest development in technologies, increased computer power and connectivity between people in different part of the world, many systematic trading strategies that were previously available only to elite investors are now becoming more accessible to the broader market. And since cryptocurrencies became more popular among investors, many trading strategies has been also applied to cryptocurrency trading.  

So, the Cryptocurrency Trading Robots provide access to what is called automatic trading, systematic trading or algorithmic trading, and that all means pretty much the same.

There are types of investors, that are called long-only, who are investing in the asset class with the expectation that it will increase in value over time. They normally hold on to investment for a long time and can lose money in the volatile or bear markets. Such investors are also often called value or fundamental investors. But on the side, there is a large number of active investors who are looking to make money both in bull and bear markets. Among ordinary investors, this is often called day trading and it means that profits can be made when the prices are rising as well as when they are declining. Such investors also benefit from market volatility, which means that they have many more opportunities to buy high and sell low, or take a short position, and make a profit.

To be successful in automated trading, investors would normally need to make a large number of trades and their holding period could be as low as few minutes (or even milliseconds in case of institutional high-frequency trading firms) to a couple of hours, or days. That means that day traders can make small profits but on a large number of trades. Of course, not every trade is profitable and some can lose money. But as long as on average you make more profitable trades than ones, you still make money. So, the crypto trading bots that are becoming so popular today will all have their roots in automated trading that investors are using in traditional markets.

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How Automated Cryptocurrency Trading Works

There is a number of different types of crypto trading robots and we will explain this in details a bit later on. But all crypto trading robots will have a number of characteristics in common.

Automated Trading

The most important characteristic of crypto trading robots is that allows you to trade cryptocurrencies 24/7 as long as the market is opened. Another massive advantage is that investors don’t have to be in front of the computer screen all day long to be able to trade. Once you start trading on autopilot, you can effectively make money when you sleep and have the computer do most of the work for you.

Cryptohopper Review | Crypto Trading Bot |
Cryptohopper Review | Crypto Trading Bot |

No Human Factor

Another important benefit of the computer doing trading on your behalf is that you exclude human emotions in making decisions (which is more often than not works for a better). Quite often, investors can allow their emotions to get on their way and will either sit on their investment for too long or react too early. As with everything in life, there never could be a 100% guarantee and some human oversight is still required but still, computers can execute most of the day to day work while people monitor their activity

Crypto Trading Strategies & Signals

Most automated crypto trading strategies, as well as traditional ones, rely on technical analysis, trading indicators and signals. Trading algorithms are designed to perform the analysis of the market price moves and produce signals when to buy or sell the underlying asset. There is a large number of technical indicators such as Stoch, RSI, Bollinger Bands, MACD and many others. Algorithmic traders might use volatility indicators such as bands to make frequent and small gains. They can also use Trend Indicators such as MACD and moving averages such as EMA, SMA and KAMA when making investments. There are also Volume and momentum indicators (oscillators) such as Stochastic, Stoch-RSI, RSI and many others. Basically, trading signals and indicators is a “secret sauce” of successful crypto algorithmic strategy and we strongly encourage you to learn and educate yourself. The good thing for newbie traders is that most of the crypto trading robots offer extensive educational resources that allow learning the basics of the crypto systematic trading very quickly. Some crypto trading platforms also offer social trading, so if you are not confident in creating your own strategy, there is also a possibility to follow a trading strategy of an experienced trader.

Zignaly Review | Trade Crypto The Smart Way |
Zignaly Review | Trade Crypto The Smart Way |

Are Crypto Trading Robots Profitable?

Obviously, this is one of the most important questions for any cryptocurrency investor. How much money I can make with crypto trading robots? Well, as the old saying goes: “There are only two certain things in the world – death and taxes”. As with any asset class, investors have to remember that investing in cryptocurrencies is risky. Past performance can never be a guarantee of future results and if someone promises that you will start making money from day one – that is definitely a red flag. There is no such thing as a free lunch in investing and we think the good approach to investing in cryptocurrencies is not to invest more than you can afford to lose. That doesn’t mean that you will lose all your money, but it is always important to remember and manage risk. We also think that if you are just learning the ropes of cryptocurrency trading, it is always better to start small and increase your stakes as you gain experience and confidence in the market. It is important to learn and master your trading skill if you really want to succeed in anything in your life, and the same applies to crypto investing.

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It is reported that on average that it is possible to make 2-3% in daily profits with a good crypto trading robot. Of course, not every trading day could be profitable but it is very possible to pocket 20-30% monthly return on your investment. Self-education, discipline and consistency are the keys to success in day trading. Of course, it is important what trading algorithms you use and what the market conditions are. What works in one market might not work in the other, and crypto investors need to adjust their strategies accordingly and test what indicators and signals work best for them. The general, the more volatile markets, the better for day trading.

To close this section, it is important to mention that most likely none of the Crypto Robots and Automated Trading Strategies will be profitable when the market is falling off a cliff.  So it is always important to have the stop loss every time you trade to minimise the downside.

What are the different types of Crypto Trading Robots?

There are two distinct types of cryptocurrency trading robots and here we would like to explain what the differences are.

Crypto Trading Robots affiliated with CFD Brokers

This type of Crypto Trading Bots uses a certain type of trading algorithms and is affiliated with CFD broker. In order to start trading, you will need to open an account with such a broker, complete the onboarding by proving the copy of your passport, residential address and other details. Once you deposit funds with the broker, you will be able to use their auto trading algorithms and can start trading.

We have to say, that such trading bots and their algorithms are more of a black box. They are typically less customisable where investors are allowed to set basic trading parameters such as stop loss, trade size, take profit and similar ones. But it is not possible to look inside the algorithm or configure and tweak it.

On the other side, such robots are more suitable for newbie investors who don’t know much about algorithmic trading strategies and happy to rely on their broker. Typically, such robots are free and have demo accounts so you can try them out first before committing any money. Obviously, as they are affiliated with CFD broker, the broker makes money on trading commissions or spreads. Also, brokers are incentivised in providing investors with quality algorithms so they investors keep trading with them by making money.

The potential downside of using this type of Crypto Trading Robots is that CFD Brokers provide a limited number of altcoins that you are able to trade. Of course, you can invest in Bitcoin, Ethereum, Ripple, Litecoin and some other major cryptos, but this number will still be limited. As with any CFD broker, you won’t actually own the underlying asset but if you just want to make money from price moves that still can be work for many traders.

If you decide to invest with one of the crypto trading robots affiliated with CFD broker, please do your due diligence on the broker to make sure you trade with a reliable company.  If CFD broker is regulated, they should give you more piece of mind. If the CFD broker is not regulated, it still can be a credible one and have good trading algorithms but investors need to be a bit more careful. Try them out first by investing a smaller amount, try and withdraw it, contact their customer support to see how soon they reply and perform few other tasks to get a better feel of how such broker operates and treats their customers.

As before, our advice would be to start investing with the smaller amounts to see how the brokers work and how good their algorithms are. Once you feel more confident and start making money, you can increase your stakes and prop up your game.

Examples of Crypto Trading Robots affiliated with CFD Brokers are:

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Crypto Trading Robots that trade through Cryptocurrency Exchanges

Another type of crypto trading bot is automated trading platforms that allow investors to create their trading strategies (or use ones built by others) to connect and trade directly from the exchanges. Such trading robots are fully transparent and you can create your own trading strategy, chose which indicators and signals to use, configure trading and other parameters. Some of them also have access to strategies marketplaces where you can go and buy a strategy developed by other experiences crypto traders. Given, most of such trading robots provide access to major cryptocurrency exchanges, investors can trade pretty much any altcoin listed on the exchange, including Bitcoin, Ethereum and many others. So you can pretty much get access and trade the whole market while if you trade with CFD broker you would be limited to a very few.

We quite like the level of customisation available with this type of crypto robots but investors must have a decent understanding of trading strategies and know the basics of technical analysis and trading indicators. This might look like an obstacle for newbie investors, however, the trading bots that we covered in our reviews have extensive educational libraries with lots of videos and reading material available. They also have active communities of crypto traders so you can always tap into the collective wisdom and ask for help if required.

It is very easy to start trading with this type of crypto bots. You can register with your email address and can quickly connect to the exchange of your chose via the API. But you will need to have an account with the crypto exchange that you would like to trade. Needless to say that you need to keep your computer switched on in order to be able to trade.

There are also two types of such crypto trading robots. The first type is sold as software at a one-off fee. You will need to download it, install it on your system and then connect to crypto exchange. Example of such crypto robot is GunBot from Crypto Trading Bot. Another type is a cloud-based crypto trading platform that allows you to access it from any computer. Investors can have access to strategies marketplace, third-party providers of trading signals, active community of traders and good support. Examples of such crypto trading robots are HAAS, Cryptohopper and Zignaly.


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