Bots for trading on cryptocurrency exchanges. How to choose and use? from alanpoe's blog

Types of cryptocurrency bots A robot (bot) is a program that has a certain algorithm. It buys or sells assets depending on the market situation. The first trading robots appeared in 2012, and since then they have become more and more perfect. According to some estimates, in Forex and binary options, more than 90% of short-term transactions are made either by bots or with their participation.

There are 4 types of cryptocurrency trading bots:

• Arbitrage - works on two or more trading floors, the main income is on the difference in rates between them.

• In a Telegram channel — Search for buyers or sellers in Telegram.

• Bots for collecting cryptocurrency through faucets. Faucets are online services that distribute Satoshi or other pennies in cryptocurrency for free. They are quite well protected from bots and require captcha. Until it is written, there are only promising, but not ideally working, developments of good robots that can make good money on faucets.

How does a robot trader work?

Bots for automatic cryptocurrency trading work according to special algorithms, trading strategies, which, in turn, are created on the basis of technical analysis of patterns. An independent analysis will require historical data on course changes (charts for at least the last year), sometimes it is possible to find a connection with the news. In addition, after identifying patterns, the strategy is tested on the same historical data, and the number of potential losses and profits is calculated. And with satisfactory results, on their basis, the rules of the trading strategy of the robot for the exchange of cryptocurrencies are created. Some bots additionally use indicators that allow you to analyze the current market situation, while others are launched only when certain market conditions occur. Learn more about kucoin trading bot. 

The trading strategy for exchange and arbitrage bots can be very simple, for example:

• When the price of a cryptocurrency goes down, you need to buy it.

• When the price rises, it must be sold.

Or much more difficult. The algorithm can take into account the latest historical data, indicators and be guided by signals. High-quality bots analyze more than a hundred parameters when placing orders. In some programs, the algorithm does not change, but there are bots for which you can connect or configure additional parameters. This option is well suited for experienced traders who prefer their own trading style. Standard bot can:

• Assess the market situation, follow the course for a certain period of time, make a forecast.

• When trading manually, it can give signals to the trader.

• Create sales or purchase orders.

• We provide reports on profit or loss.