Soon after the appearance of cryptocurrency exchanges, robots began to appear on them, or, as they are more often called, bots for cryptocurrency trading. Their appearance was predictable. With the growth of Bitcoin on crypto-countertops, a large number of inexperienced traders appeared who could not work with analysis tools and simply tried to buy currencies at a low price and sell at a high price. These attempts were not always successful, time and nerves were spent a lot, and the actions seemed so simple that it became obvious that the unpretentious program the robot could handle them completely, moreover, there is a similar program on the stock markets for a long time.
In the virtual world, a bot is a program that is configured to perform repetitive actions. They are written in order to save a person from mechanical, monotonous work.
The bots for trading cryptocurrency are no different from their fellow minds; they are set to mechanical trading on exchanges according to specified parameters.
Robots are more difficult to use a number of additional data and place orders only if the data complies with the indicators specified by the owner. For example, they can “view” a chart of the cryptocurrency rate for the last N days and start buying it if the chart displays a fall in the range of 10 15%, but ignore the currency if the drop exceeds 25%. There are also complex bots that take into account dozens of indicators.
- electricity costs;
- the cost of the bot itself.
Arbitrage bots are the same trading robots, they only trade within several exchanges, earning income as a result of buying currency on the exchange, where the rate is lower, and sales on another exchange, where the rate is higher.
A cryptobot strategy is a set of parameters on which it is oriented when trading. Sometimes the owner sets it manually, and then the cryptobot strategy is, in essence, a trader’s strategy integrated into the program.
The smaller the bot has customizable parameters, the less you can influence the strategy. Accordingly, the more such parameters are, the more profitable the robot can be in the hands of an experienced trader. But there is also a reverse side of the medal. If a trader is inexperienced, a large number of parameters may confuse him, and he will set up indicators at which trade will be unprofitable.
Therefore, for beginners in cryptobots written for subsequent sale, strategies are often offered with all the parameters set. There are strategies that imitate stock market strategies, strategies developed for certain pairs of cryptocurrencies, etc.
On the exchanges, everything is different, their owners are interested in automated trading, because bots perform many operations, a commission is charged for the operations, and the commission is the earnings of the exchange owners. Therefore, they are not prohibited on most exchanges (in particular, on Bittrex, Poloniex, Kraken, Bitstamp, Bitfinex, EXMO). Just in case, however, this question should be addressed to the technical support of the used exchange.
There is, however, an intermediate option of buying or downloading a script (a kind of basic code) with its further addition in accordance with its needs.
The API (Application Programming Interface) is a set of information on the current state of trading and a set of functions that allow you to enter the auction according to specified parameters. The exchange itself provides these complexes. You can construct a robot without an API, but it will be longer, because you have to write the above. API is on many exchanges, and an attempt to write a robot for an exchange without an API often does not make sense (unless it is written out of sports interest or to order).
Bots are now relatively common. You can buy them from companies involved in their development (HaasOnline, BTC Robot), and from individuals (for example, on forums).
Companies, as a rule, offer bots of different classes for different times at different prices. You can buy an economy package, which will include the simplest bot for a month, you can – a luxury package, which will provide the bot with a couple dozen strategies for timeless use. Of course, there are intermediate options.
Private traders simply create one or two or three bots at once, describe the strategies they have with other parameters and offer to buy for a fixed price. Scripts for creating your own bots can also be bought from companies and individuals.
All of the above, of course, can be ordered individually – under a certain exchange, with certain rare parameters. Of course, a customized bot will be significantly more expensive.
In the open spaces of the network, a considerable number of both ready bots for certain exchanges (Kraken, Poloniex, etc.) and blanks are offered. Predicting how safe these programs are and how well they work is impossible.
Cryptocurrency volatility is high, you can earn on it for an hour, and the bots do this task with a bang. However, if you take not an hour, but a day, then the bots begin to give way to humans.
An experienced trader will more accurately predict the situation, he will have time to calculate everything and determine his actions, and he will ultimately get more profit than the bot, which will act the same as in the morning, although the situation may change significantly during this time.
The most complex cryptobot with hundreds of customizable parameters is able to act only in typical situations. In abnormal situations, which, by the way, more often regular ones bring traders greater profit (or big losses), the robot will behave illogically or will not lead in any way, and its owner as a result will lose existing or potential money. Even the most sophisticated robots are not able to carry out fundamental analysis, evaluate each individual case and do a lot of what brings profit to the experienced trader. There are no words about simple things.
The pitfall that a bot owner can face is a commission. If you put in a bot is not fully balanced strategy, then it will make a lot of deals. The exchange takes a commission for each transaction, and as a result you can pay a decent amount. Of course, the bot can be configured otherwise set the parameters in which it will make fewer transactions or in which the commission will automatically be deleted from the profit. But remember the commission needed.
Also, do not forget that cryptobots are just programs. Which tend to fly, hang, crash, sometimes at the most inappropriate moments.
To say now that some kind of bot is 100% reliable, can only the person who wrote it from scratch. Neither the scripts nor the assurances of developers do not guarantee the complete safety of the robot for the owner.
Self-writing bot profits, of course, will bring. But it is obvious that a good bot can be written by a good not only a programmer, but also a trader – and if he is good, it will be more profitable for him to play manually.
A newcomer to a crypto trading usually makes many mistakes. Over time, he notices patterns, learns, and if he reads the relevant literature, he quickly becomes a good player and increases his income. Then he moves to other levels, profit increases in proportion to trading volumes. The robot started trading as well as trading, and its owner did not know anything, and will not know. Accordingly, if there is no growth you will have no profit, no skills.
In addition, simple cryptobots are usually not less than $ 10 per month, and the cost of arbitration can reach $ 500 per month. Many are built in such a way that they will work only as a plus, that is, they do not even sell a noticeably falling currency and wait for its rate to increase again. Sometimes it takes a very long time to wait (you can’t wait at all). Some start selling it as soon as the exchange rate falls, and also lose money. On average, with favorable conditions and correct settings, the bot’s income is about 50–70% per month, it can increase to 100%, but it can fall to 20%.
The above mentioned leads to the fact that bots for cryptocurrency trading can theoretically become a source of good income, but in practice this requires too many conditions.
With small investments (say, $ 10-20), the bot will not pay off soon, if it is provided to the user forever, and may not pay off at all, if the subscription to it is monthly. When investing more (for example, $ 1000) in a reliable bot, it is likely that it will pay off and bring profit.
But there is a problem with finding a reliable bot. To finding a bot that would not be another development of scammers would work well and smoothly is a non-trivial task. You can easily make mistakes more than once or twice before you can find such a program.
And finally, the most reliable bot will bring good profits only if there is a periodic review of strategies and reconfiguration, which again leads to the need to understand trading and understand what the bot does.