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Automated Crypto Trading — Way To Earn Or Another Scam?

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Jan 10, 2023
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8 min read
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This blog post will cover:

  • How does automated crypto trading work?
  • Can you profit from automated crypto trading?
  • Is automated crypto trading legal and safe?
  • Pros of automated crypto trading
  • Cons of automated crypto trading
  • Crypto trading bots to try
  • Conclusion

Considering the infinite diversity on offer in the crypto market as far as cryptocurrencies and trading schemes are concerned, there are various ways to make profit with your investment capital. For example, the centralized crypto exchanges offer many trading techniques and approaches not requiring your 24/7 attention.

However, all the variety can be too much, too complicated for a newbie. Pretty soon, what seems to be a part-time, enjoyable thing to make money on the side will become a full-blown, full-time job – if not obsession – if you want to make any sort of tangible gains at all.

That’s where automated crypto trading comes in. Plenty of automated trading bots have sprung out of woodwork, allowing traders of all persuasions to carry out their trading approaches to a tee and execute them on their behalf based on their preferences.

How does automated crypto trading work?

Trading is a largely manual process that takes time and effort before you get the hang of it and get to a level where you can do it on your own comfortably.

However, the truth is that not all of us have the technical wherewithal or the time and bother to trade crypto on our own. Despite the best efforts of trading platforms to simplify the process of purchasing and selling cryptocurrencies, scheduling and dealing with trades, the learning curve remains steep and daunting for many users. 

Here’s why automated cryptocurrency trading appeared. It’s gaining mindshare among crypto traders to help them shore up their crypto portfolios and make some coins.

Algorithms are the key ingredient that makes automated trading, well, automated. In essence, algorithms are a set of rules followed in computational calculations and problem-solving operations. You could already have heard about the power of algorithms in social media platforms, which use them to deliver content based on your activity and likes.

You can say the similar thing for algorithms in the crypto sphere, where they’re utilized for trading cryptocurrencies and related digital assets by programs called trading bots.

Such bots use software intermediaries called app programming interfaces, which give your trading account an opportunity to interact with a crypto exchange on your behalf – and perform customized trades using your digital assets.

Can you profit from automated crypto trading?

Yes, you might turn in a good profit via automated crypto trading bots granted you set them up the right way. However, they aren’t foolproof, either – you can just as much lose your capital utilizing a trading bot in case you fail to stringently test them.

In order to turn in a profit consistently with automated crypto trading programs, you have to continuously calibrate and recalibrate your strategies and conditions based on market trends. After all, there’s a reason why larger financial institutions, banks, and investment funds are utilizing trading bots.

Is automated crypto trading legal and safe?

It’s perfectly legal to use automated crypto trading bots – in fact, they were often used in traditional equity markets. 

Here’s the thing, though: not all exchanges permit you to use bots. Make sure with your broker if they allow trading bots before shelling out money buying one or spending time building one.

It’s time to discuss safety. It depends on how well the automated trading bot is built and how frequently its performance is monitored. You can’t simply set and forget about it and expect to make some profit – otherwise, if it was that easy, everyone would be a millionaire. Market volatility and variance is real, and no algorithm can prepare for all the potential outcomes in a market as erratic as crypto can be. 

That said, trading bots have an opportunity to help traders deal with the emotional swings, impulsive trades, or fat-fingering a trade (a costly mistake!) that could lead to complete and total liquidation. Trading bots streamline, organize, and trade on your behalf premised on a certain set of programmed preferences. 

Pros of automated crypto trading

Automated crypto trading bots can bring about the most salient benefits as follows: 

  • Faster trading speed and precision. Automated crypto trading bots can perform trades faster than a human due to particular conditions, indicators, and preferences. Bots can respond to the conditioning of the market in a split-second, making for precise, fast trades.
  • Streamlining repetitive tasks. Crypto bots, unlike humans, don’t need eight hours of sleep to perform at their best. They can automatically trade any market 24/7, removing most of the rote, mind-numbingly repetitive tasks traders often have to deal with.
  • Less room for errors. Since bots can be programmed to work all the time and perform orders on your behalf, they give you less room for error, and help you rein in the emotions and impulses that can cause you to make ill-advised trades. Working with algorithms helps you be more consistent with your trades predicated on programmed instructions.

Cons of automated crypto trading

On the other hand, automated crypto trading isn’t without its disadvantages such as the following:

  • Technical malfunction. Just like any other computer program, automated trading bots can face data feed or oracle glitches, network or power outages, and bugs. That means trading bots aren’t completely bulletproof – these errors can cause them to execute losing trades nonetheless.
  • Rigidity. Automated crypto trading bots are hardwired to stick to a certain set of rules, making them incapable of discerning context and adapting to rapidly-changing market conditions. This inflexibility can lead to missed chances or ill-advised trades..

Crypto trading bots to try

Here we will list a few crypto trading bots in case you want to try automated trading. 

Pionex 

This bot is made for both newbies and advanced traders. It comes with sixteen built-in trading bots for all the necessary purposes, a tiny fee of 0.05% and over 300 crypto assets available. Pionex has quite a high rate in different aggregators. 

CryptoHopper

A good choice for professionals, but still will fit the needs of beginners, too. It is a cloud-based crypto trading bot which utilizes an algorithmic programmed trading strategy and gives users an opportunity to use external signals to make wise decisions when trading. CryptoHopper supports 9 crypto exchanges, most of them are well-known — Coinbase, Binance, KuCoin etc. 

Bitsgap

Supporting 14 crypto exchanges, Bitsgap offers to automate the crypto trading via its bots which are ready to work 24/7 in different market conditions. There is a 7-day free trial. No credit card needed to start — you can just sign up and begin trading. According to the website, Bitsgap uses a high-end encryption in order to protect the connection between the platform and exchange.

Of course, there are tens of bots out there and you can (and should!) do your own deep research on automated trading bots and choose one that completely meets your personal needs. 

Conclusion

Automated trading bots aren’t the panacea and be-all, end-all that would reduce your risk exposure to 0 and help you navigate market headwinds with 100% success. Ultimately, trading bots can be a key part of your trading arsenal as a tool that can help streamline and optimize your trades – for as long as you are diligent in monitoring their performance and adjust their algorithms.

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.

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