7 Best Crypto Trading Bots + Benefits & Disadvantages

People are always looking for ways to get an edge in the growing and volatile cryptocurrency space. Like with any financial market, traders want to leverage information and technology to improve their odds and get better outcomes. One such notable solution in the DeFi space is crypto trading bots.

These software solutions come with numerous benefits and can help users automate their endeavors or prevent emotional trading. So, why isn’t everyone using a trading bot and making a profit?

As is common in the crypto sphere, there’s a lot of misunderstanding surrounding these bots. That’s why we’ve created an article explaining what the bots are, what their pros and cons are, and how you can use them to your benefit. We’ve also provided you with several examples of the most popular ones, so without further ado, let’s get started!

What Are Crypto Trading Bots?

Crypto trading bots are software programs designed to automate cryptocurrency trading using algorithms. These algorithms are predetermined sets of rules on how the bot should analyze the market, what indicators it should follow, and when and how to initiate trades.

One of the main reasons for the popularity of these bots is the fact that the cryptocurrency market operates 24/7. Unlike traditional financial (TradFi) markets that mostly work during business hours, crypto trading occurs non-stop. As a result, opportune moments can arise at any point, even when a trader is unable to capitalize on them.

That is where crypto trading bots come into play to execute trades when the circumstances are right, but manual trading isn’t possible. Like crypto markets, they operate around the clock and can vastly increase the gains through sheer volume of trading.

Another key reason many traders employ bots is to remove the emotional decision-making that drives every human action, often leading to suboptimal trading outcomes. Trading bots are programmed to follow specific strategies they’ll never deviate from.

These tactics can be as simple as following and trying to capitalize on current trends and narratives. On the other hand, some bots utilize sophisticated algorithms and even artificial intelligence to try to predict future market movements. The ultimate goal is to increase profitability through continuous, analytical, and impartial trading.

How Do Crypto Trading Bots Work?

Crypto trading bots work by using programming to execute trades on behalf of their owners. They are made by savvy developers who are also proficient in cryptocurrency trading.

The programming for these bots can be as simple or complex as necessary, depending on the trading bot’s features and the tactics it employs. Some basic crypto trading bots for beginners can be set up to make straightforward trades of buying and selling coins and tokens when they come within specific price ranges.

On the other hand, there are trading bots with intricate programming, following many differenttrends, charts, and signals at the same time. Some of the common metrics that these software pieces take into account while trading include past and current prices, trading volume, and time frames.

More than that, many complex bots are programmed to take various indicators into account, such as Bollinger Bands, Relative Strength Index (RSI), Moving Averages (MA), Fibonacci retracements, MACD, On-Balance Volume (OBV), and more.

As a retail trader and investor, you can obtain a crypto trading bot by either downloading it or subscribing to a service. There are both free and premium solutions, with premium ones ranging from one-time payments to ongoing subscriptions.

Once you have a crypto trading bot, you can generally connect it to an exchange using an API. API stands for Application Programming Interface, and it acts as a bridge connecting two software solutions.

When it comes to crypto trading bots, connecting them to an exchange and using them to trade also means giving them access to your funds and accounts. Because of that, it’s crucial to know what you’re doing and to only use bots from reputable sources. Some programmers create harmful bots with malicious coding that can hack and steal your assets.

7 Best Crypto Trading Bots

Here’s a list of some of the best crypto trading bots that work. With so many different ones out there, it’s important to familiarize yourself with the leaders in the field of automated cryptocurrency trading.

#1. 3Commas

3Commas offers comprehensive trading bot solutions designed to be used on centralized exchanges. They have bots for the majority of the biggest CEXs in the world. Some notable examples include Binance, Kraken, Crypto.com, KuCoin, OKX, Coinbase, etc.

The platform offers three types of bots, which are:

1. DCA bots, which help you slowly and steadily invest in your favorite crypto using a dollar-cost averaging technique
2. GRID bots, which are perfect for “buy low, sell high” trading in relatively stable sideways markets
3. Signal bots, which are created for TradingView and conceptualized to give users the most information out of valuable trading signals

The company operates on a subscription plan. A beginner plan is fairly cheap and allows for 10 active trades and 2 signal and grid bots, among other perks. Pro and expert plans boost the benefits but also vastly increase the price.

#2. Cryptohopper

Cryptohopper offers highly customizable trading bots and automation software. Their solutions cover everything from asset management and automatic mining reward-to-funds conversion to beginner and advanced trading on exchanges.

One of the key strengths of Cryptohopper is its vast and diverse collection of products that cater to every user. Beginners can take advantage of some of the following features:

• Paper trading, which allows them to experience the market without the risk of financial loss
• Backtesting, which helps test a preconfigured bot to see how it would’ve performed in the market so far
• Automatic trading, which is simple to set up and outperforms the majority of human traders
• Copy bot trading, which allows inexperienced traders to simply copy the orders of experienced professionals

On the other hand, advanced users can enjoy features like:

• Trailing orders
• Social trading
• AI trading
• Personal strategy designing

#3. Coinrule

Coinrule is a beginner-friendly crypto trading bot platform that allows anyone to automate their trading regardless of programming experience. Some of their bots come with preset strategies you can implement in a simple plug-and-play manner. Notable examples of these strategies include:

• Ride The Trend
• Buy the Dip in Bull Market
• Low Volatility Buy and Sell
• Maximized Crossing Moving Averages

Still, figuring out which strategy might be most profitable in current market conditions requires a degree of knowledge of the crypto space.

Coinrule bots operate across many different centralized exchanges, including Binance, Kraken, and KuCoin. They also have a no-code programming component that allows non-developers to create personalized bots that best suit their needs.

Finally, they offer crypto trading bots for free with a starter plan, though the features are limited. Higher tiers, such as Hobbyist, Trader, and Pro, give exponentially more perks while upping the price.

#4. Unibot

Unibot is a Telegram trading bot that facilitates trading on the Uniswap v3 decentralized exchange (DEX). Decentralized exchanges operate differently from centralized exchanges, and the process of buying and selling crypto is usually more complex. This bot aims to alleviate this issue by allowing people to trade directly from the Telegram messaging app.

As a result, Unibot doesn’t operate like the usual CEX-designed bots. It comes with a platform that creates a CEX trading experience, featuring panels with tools, charts, and trading controls. It’s a perfect solution for people who want to keep their private keys in non-custodial wallets while trading since centralized exchanges use custodial wallets.

The bot has many other DeFi capabilities, like allowing users to participate in governance, earn yield, or choose lower gas fees. Finally, Unibot does include some of the more common aspects of trading bots, such as copy-trading.

#5. DefiQuant

DefiQuant is an AI-powered trading platform that helps complete beginners take advantage of bot trading to earn a steady income. You can start AI trading with them in three simple steps, which are:

1. Register with an account
2. Choose one of the several premade plans
3. Let the bot run for a predetermined period before earning a profit

The platform offers nine different plans. Every new plan runs for more days and requires more capital. The main upside is that the first plan allows you to experience what DefiQuant has to offer for free with a bot that runs for one day with an initial investment of $5.

DefiQuant leverages AI-driven decision-making coupled with the core characteristics of trading bots, which are automation, speed, and emotionless trading. With 24/7 customer support and no need for specialized knowledge, it’s a solid solution for entry-level traders and bot users.

#6. SMARD

SMARD is the official partner of the OKX centralized exchange and, thus, one of the best solutions to use if that is your primary trading platform. The company promises average returns on your monthly investments of at least 5% or more. These gains are supposed to beat the growth of both BTC and ETH in the long run.

Apart from OKX, SMARD integrates with Binance, with plans to connect to additional exchanges in the future, like Kraken, ByBit, and KuCoin. These bots are perfect for long-term users as they focus on slow and steady capital growth. They rely on risk management techniques like trailing stops and stop losses.

Another upside of SMARD is that there are no upfront costs,and users can start with as little as $1,000. Still, it is a premium bot, and the fees are 10%, which is deducted from your monthly earnings.

#7. Centralized Exchange Trading Bots

A lot of centralized exchanges, like Binance, Kraken, and KuCoin, have proprietary bots that their users can benefit from. These can be anything from grid, DCA bots, and copy-trading bots to customizable solutions traders can tailor to their own needs.

Most of these solutions are free to use once you create an account with the exchange. The main benefit is that they require little to no setup or technical knowledge. Some bots can run automatically; all it takes is to fund them. Others require more knowledge, but they offer advanced features once programmed properly.

5 Benefits of Using Crypto Trading Bots

Crypto trading bots offer numerous benefits to experienced enthusiasts who know how to set them up and use them correctly. Here are some of the most important advantages:

1. 24/7 functionality. Cryptocurrency markets are decentralized and thus operational around the clock. While a human trader can’t monitor them and participate all the time, they can use a bot to trade for them. This allows people to continue trading and potentially make a profit even while asleep, commuting, taking holidays, and so on.
2. Dispassionate trading. Even experienced traders make decisions that are at least partly influenced by emotions. That can drive them to close positions prematurely due to fear, set illogical target prices and stop-losses, hold positions longer than expected out of greed, etc. Crypto trading bots strictly follow programming and never deviate.
3. Speed and efficiency. Trading bots can track multiple assets and trade numerous cryptocurrency pairs simultaneously. They are often used by established traders who have developed proven tactics. Bots help them cut the time required to analyze different pairs and manually open and close positions.
4. Market timing. Another perk of crypto trading bots is their ability to instantly execute a command when the preprogrammed conditions are met. That makes them more accurate than humans, allowing bots to capitalize on situations much quicker than a trader can.
5. Income diversification. Bots can be set up and running with a specific budget for extended periods of time. Moreover, they can manage multiple accounts and trading pairs simultaneously. By focusing on low-ROI, stability-oriented tactics, they can provide a slow and steady stream of passive income.

5 Disadvantages of Using Crypto Trading Bots

Crypto trading bots aren’t flawless solutions, and there are several disadvantages you should be aware of before opting for them. Here are the biggest drawbacks:

1. Complexity. Cryptocurrency trading is a complex endeavor, even without the use of intricate bots. Setting these programs up can be a difficult task, especially for users who don’t have a technical background or programming know-how. Moreover, many bots require constant management and optimization to function properly.
2. Technical challenges. Bots require a computer to run on. If you have a downloaded bot, you must ensure that your PC is turned on and connected to the internet at all times. A power or internet failure will interrupt the process and even harm some of your trades. Those who use online versions rely on providers to keep their bots running.
3. Inflexibility. While dispassionate trading and strict following of the algorithm are some of the main perks of trading bots, sometimes a strategy needs to be changed on the go. Bots aren’t capable of analyzing and taking into account unforeseen signals and events that aren’t built into their programming.
4. Security risk. Crypto trading bots need to have control over your funds and accounts to operate properly. That means giving third-party software access to your private keys and potentially large sums of money. Malicious developers can exploit this fact and create bots with malware to steal your account details and assets.
5. Bugs and glitches. Like any software, trading bots are prone to occasional bugs and glitches. Once found, they usually get patched up quickly. Still, they can cause some damage in the meantime, which can lead to financial loss.

Key Takeaways

Due to their technological nature, cryptocurrencies and trading bots go hand-in-hand. It’s clear that crypto trading bots are more than just a gimmick. They are a powerful tool and, in the right hands, can significantly simplify and speed up trading, leading to an increase in profit.

However, they aren’t the be-all and end-all solutions to all your financial troubles. Trading bots should be used with caution. Inexperienced traders who don’t know even the basics of trading are more likely to lose money using them.

Ultimately, these programs are just another asset to utilize in the ever-expanding world of DeFi. Like with investing, do your own research before using them, and you’ll be one step closer to financial freedom!

Crypto Trading Bots FAQ

• Is robot trading profitable?

  Robot trading can be profitable if it uses the correct tactic that complies with the prevailing market conditions. Improperly set trading robots likely won’t be profitable and can also lose money. Moreover, a good robot can turn unprofitable if market conditions change and its programming stays the same.

• How much can a beginner make with crypto trading bots?

  How much a beginner can make with crypto trading bots depends on multiple factors, such as bot programming, risk tolerance, starting capital, etc. On average, successful long-term traders can see between 5% and 10% monthly returns on their capital, which is also a solid number for crypto trading bots.

• Do trading bots make losses?

  Trading bots can make losses the same way they can make wins. They aren’t foolproof trading solutions that are always profitable, as they simply automate actions that would otherwise have to be implemented manually. A trading bot is only as good as the preprogrammed tactic it employs.

• Is bot trading good or bad?

  Bot trading is not inherently good or bad. Its viability depends on the quality of the bot and the way it’s used. A savvy user can enhance their trading with the use of crypto trading bots. Traders with subpar trading tactics won’t improve their odds just because they use bots.