There are two distinct features of the Cryptocurrency market that traders need to be aware of. First, the market is open 24/7 per day all through 365 days a year. Second, the market is extremely volatile. The prices of Cryptocurrency assets fluctuate sharply, either increasing or decreasing. The combination of these two features makes it imperative for traders to always be alert and monitor the market for changes in order to trade effectively and make profits. Unless one trades for a living, this is a very arduous task. The rapidly changing landscape of crypto has resulted in high volatility which manual traders cannot react to. More importantly, these swings occur around the clock making it impossible to monitor markets effectively.
So what solution is available for hobby traders?
AUTOMATED CRYPTO TRADING BOTS
The idea of a Cryptocurrency trading bot is to help with the limitations of human traders.
Cryptocurrency trading bots are a set of computer or software programs that are programmed to execute some pre-set trading strategies or rules, thus helping traders automate their trading process. Crypto trading bots carry out a host of functions such as:
- analyzing and interpreting market data,
- buying, selling, and holding Cryptocurrency assets
- analyzing market trends
- calculating market risks
- reacting to the market 24/7.
An important thing to note is that these bots do not act on their own accord, they need a set of predetermined rules which are specified by the individual trader. These set rules guide how the bot responds to changes in the market.
HOW DO BOTS REALLY WORK
Trading bots function as a result of the rules embedded into their code. For instance, you can teach a bot to conduct market analysis that makes it collate data from multiple sources, interpret it and make decisions on whether or not to buy, sell or hold a cryptocurrency asset at a certain time. Also, there’s the market risk prediction component that lets the bot use data from the market to determine the risk potentials in the market and decide how much would be appropriate to trade based on the current risk level. We also have the execution component which lets the Bot connect to cryptocurrency exchanges via APIs and buy or sell the cryptocurrency assets strategically, directly on the exchange.
WHY IT IS USEFUL TO TRADE WITH AUTOMATED CRYPTO BOTS
There are quite a number of reasons that make trading with Crypto bots very attractive. They include:
- No emotional trading
As humans, we are very emotional beings. Even the best of traders are prone to make emotional decisions. We are all prone to respond to emotions like fear of loss, greed for profits, excitement about a bullish market, stress from a 24/7 volatile market, etc, and this clouds our judgment and results in irrational trading decisions. Using crypto trading bots helps to ensure that trading decisions are based on logic rather than emotions.
- Efficiency
Using trading bots is way more efficient and fast than trading manually. The market is open on a 24/7 basis, only bots can quickly catch opportunities in the market and execute it with speed and accuracy. No need to worry about delays or human errors. It is a more trusted way to take advantage of market opportunities and make profits.
- Time-Saving
Crypto-trading bots do not need to take a break or sleep. They watch the market on behalf of traders. With bots, you don’t need to stay glued to your screens, once you pre-set your rules, the bots execute and work for you while you sleep.
- Demo Trading/ Backtesting/ Paper Trading
An added advantage of utilizing crypto trading bots is that it allows traders the opportunity to engage in Demo trading which lets them trade in the same conditions as live trades, thus helping to test how their trading rules or strategies would work before launching them in the market. With paper trading or backtesting, traders can use historical data to determine how well a particular trading rule would perform in the market.
DOWNSIDES TO USING CRYPTO TRADING BOTS
While using Crypto bots has a plethora of advantages, there are some downsides that traders should be aware of.
- Building a Crypto Trading Bot from Scratch is Complex
This is so because building a bot requires advanced knowledge of programming. If not done properly, the bot would not execute rules as it should, leading to trading losses. Good thing is that there are a number of startups, like Coinrule, that have built bots that can be used without needing to know how to code.
- Some level of Monitoring is required
There is a limit to the independence of crypto trading bots. The Bots do not just work on their own forever without any form of input or monitoring from traders. Traders still need to check in regularly and set trading rules or strategies that the bots run with. Thus, there is a need for some level of understanding of crypto trading. Thankfully, Automated Crypto bots by startups like Coinrule help in this regard by providing more than 150+ proven trading rules that beginners with limited knowledge can choose from.
- Security Issues
Most Crypto bots help automate trades by connecting to users’ cryptocurrency exchanges via Application Programming Interfaces (APIs) with no direct access. However, Cybercriminals are most likely to target Cryptocurrency exchanges and bots. This risk can be minimized by traders being very protective of their API keys and deactivating automatic withdrawals.
- Beware of Scams
There are quite a number of scammers on the internet who pretend to be able to help you create automated trading bots and promise ridiculous returns. The onus is on traders to carry out due diligence and confirm that they are dealing with reliable and duly incorporated and licensed companies.
TYPES OF CRYPTOCURRENCY TRADING BOTS
Different Crypto bots exist in the market based on the trading strategies employed. They include:
- Arbitrage Bot: This bot considers the differences in prices across different exchanges and uses the variations to take profits by buying at a lower rate in one market and selling it immediately at a higher rate in another market.
- Trend-Taking Bot: This Bot monitor and analyzes the momentum of a Crypto asset and either executes a Buy or Sell order. If the indicator anticipates an increase in price, the Bot enters a long position (buying it). If the indicator anticipates a drop in price, the Bot similarly enters a short position (selling it).
- Market-Making Bot: This Bot creates several buy and sell orders in order to make profits as a ‘market maker’ who sells to both sides of the order book. To make a profit, the market-making bot makes a buy order at a price marginally lower than the cost of the crypto asset and a sell order at a marginally higher price. If both orders get fulfilled, a profit is earned.
- Coin-Lending Bots: One of the ways to make a profit is to lend coins to margin traders who pay back with interest. This bot helps to automate the lending process by taking advantage of the best interest rate and taking advantage of possible increases in lending options.
- Portfolio-Automation Bots: This bot helps users to create and manage a Crypto portfolio based on their investment preference instead of actively trading for them.
We will be giving a detailed review of the top Crypto trading bots in the market today. For this comprehensive review, we consider all the important factors and components of these trading bots. They include the level of complexity, the features of the bot, trading bot technology, security measures, the team’s reputation, legal backing or license, pricing, trading support/community, connected exchanges, ease of use, user feedback, and profitability so far.
- Introduction
Coinrule is a smart assistant that empowers people who trade cryptocurrencies to build trading bots without having to program a single line of code. It is a cloud-based platform that allows users to completely automate their trading process, enabling them to make profits from the cryptocurrency market even while they sleep. Users can create trading tools or choose from the over 150 tested trading templates available to them. Coinrule can be described as a “Crypto lego toolbox” where users can create multiple trading strategies, implement them and track their performance over time.
- Level of Complexity
Coinrule has a very easy-to-use interface as it was built with regular traders in mind. The user interface is very intuitive such that beginners can easily figure out how to use the platform to automate their trading. The platform uses a very easy principle: The “If-this-then-that” principle through which users can specify their trading strategies based on certain predetermined conditions. For instance, ‘If the price of Bitcoin goes up 3% and the volume goes up 5% within 3 hours, buy $500 of BTC with my USDC wallet’.
The use of conditional statements really demystifies the complexities of setting trading rules and makes the platform user-friendly for beginners, regular traders, and hobbyists.
- Trading Bot Technology (Features)
- If-This-ThenThat principle (conditions and actions): The platform runs using the IFTTT principle. A system through which users can set some conditions, which when fulfilled, carry out a specified action. A user can select from a number of triggers such as time, events, etc. In the conditions part, the user can select from coins currently in the user’s wallet on the exchange or any coin that meets specific criteria. Then, the user picks from a number of customizable options and template rules. In the next step, the user can choose multiple buy and sell actions depending on preferences, selection, and strategy.
Operators such as ‘And Then’, ‘Or’, etc give the user additional controls.
- Trading Strategies: There are 10,000+ strategies that users can use on Coinrule ranging from Dollar-Cost-Averaging to trend following, multiple stop losses, Buy the Dip, take profit, Golden Cross trading, range trading, scalping, and so on. Coinrule also provides more than 150+ trading templates that users can pick from. These pre-made templates are ranked based on their complexity and investment preference e.g protect, maximize, long term, short term, rebalance, etc
- Demo Exchange: Users get the opportunity to test their rules before launching them live to determine how successful they would be. The demo exchange uses real-time data straight from Binance. All users are virtually allocated with 10 BTC and 100 ETH and get the opportunity to run some rules on the demo platform and see how to structure the rules in the best way to make profits.
- Security measures
Coinrule goes the extra mile to ensure the safety and security of Users and their information. The various measures put in place by Coinrule include:
- Coinrule has no withdrawal right to users’ exchange accounts. They do not request users’ private keys or direct access to their crypto wallets to use the platform.
- Coinrule uses API keys to connect to exchanges. Coinrule stores the keys in an encrypted form (256bit AES encryption), encrypted with dedicated private keys that are generated for each user separately. These private keys are stored on detached data storage which is also encrypted with AES-256.
- Coinrule also uses data encryption in transit which means all communication is encrypted using TLS 1.2 or higher. As another layer of protection against DDoS and other variants of attacks, the team utilizes Cloudflare CDN
- On the payment side, Coinrule does not process payments directly as they use Checkout.com as a payment processing partner. All transactions are marked as Merchant-Initiated Transactions (MITs) which implies that all payment details and personally identifiable information of customers are confidential.
- Coinrule allows users to enable two-factor authentication (2FA)as an extra layer of protection against hackers.
- Team’s reputation
Coinrule was founded in 2018 and is managed by Gabriele Musella, Oleg Giberstein, and Zdenek Hofler who have years of professional experience in Banking, product, fintech, user experience design, and full-stack tech development. They have previously built companies and discovered the opportunities of trading digital assets over the years. Coinrule is a Y Combinator-backed startup that has recently raised a Seed Round that included notable investors such as founders of Twitch, Kayak.com, Fitbit, and various funds.
- Legal backing/License
Coinrule is a limited liability company incorporated in the UK with company number 11265766. Coinrule is also registered with the UK‘s Financial Conduct Authority.
- Pricing
There are four pricing tiers for users to choose from.
The Starter plan is free but limited, only allowing users to trade $3,000 per month. Users get a limited number of indicators around which to build their rules.
Next is the Hobbyist plan, which costs $29.99 per month if buying on an Annual Basis. Users can trade up to $300,000 per month and use more technical indicators with the option of adding two exchanges to their accounts.
Following this is the Trader plan, which costs $59.99 per month with a trading volume of up to $3m per month. Users have access to all the template strategies, can connect three exchanges, and get one on one monthly training.
The final plan is the Pro plan at $449.99 per month. Users can connect to an unlimited number of exchanges and create 50 rules at a go. A particular highlight of this plan is the dedicated server with ultra-fast execution speeds which can make the difference for larger volume traders who are looking to place trades faster.
- Trading Support/Community
Coinrule has 24/7 support through the chat interface for technical assistance and help with navigating through the platform. Also, they offer users personalized support and periodically arrange calls with users to give them a better understanding of the platform, helping them optimize their strategies. They have in-house trading specialists who are always available to suggest strategies to beginners and help users encountering issues with their strategies. Coinrule also has a telegram community where professional traders and beginners interact and share strategies.
A knowledge base with many resources for users and those looking to learn more and improve their trades is available.
- Connected Exchanges
Coinrule supports more than ten different exchanges: Binance, Binance.US, Binance Futures, Coinbase Pro, Okex, HitBTC, Bitstamp, Bitpanda Pro, Kraken, Bitfinex, Liquid, Bitmex
2. BOTSFOLIO
- Introduction
Botsfolio is a Crypto trading bot that helps traders manage their Crypto trading portfolio efficiently. Botsfolio uses the same technique for Crypto management as a Hedgefund manager would. They automatically create trading portfolios for users based on their risk appetite with the aim of protecting their investment against the volatility of the crypto market. They create short-term and long-term trading strategies to help achieve diversification. This trading bot is mainly for beginners worried about risk management.
- Level of Complexity
Botsfolio was built with non-professional traders in mind. Users of Botsfolio do not need to worry about setting strategies or rules as the platform takes full control of trading for users based on their investment goals and risk appetite.
- Trading Bot technology (Features)
Bots: Botsfolio utilizes a number of bots to execute different sets of strategies some of which include
- Scalper Bots: This bot helps to take quick profits when there is a small movement in price
- Long Bots: This bot helps in executing long-term accumulation strategies needed to build up user’s portfolios
- Trend Bots: This bot looks for clear price movements. Then it makes trades when the market is in a clear trend.
Trading Strategies: On creating an account, Botsfolio gives users a questionnaire through which they determine what trading strategies would be ideal based on their desired outcome and risk appetite. Some of these trading strategies include:
- Value Investing strategy: This is a long-term investment and moderate risk strategy. Here, 80% of the investment is allotted to high-performing assets while the remaining 20% is allotted to growth assets. The bot buys assets at a value lower than the intrinsic value.
- Futures Trading Strategy: Here, 100% of assets are allocated to futures. This is a high-risk investment with the potential for high returns.
- Investing for Fixed Income: Botsfolio provides a savings account to users allowing them to earn interests at the rate of 6% to 8% by using USDT as collateral.
- Security measures
Botsfolio uses encrypted APIs, to connect with users’ exchange accounts. The platform does not have direct access to users’ crypto assets nor do they have the right to withdraw or transfer assets. Users remain in full control of their assets and can choose to withdraw at any time.
- Team’s reputation
Jay Sharma, with his experience in the crypto space, founded Botsfolio in 2020.
- Legal Backing/License
There’s no information about registration or any financial license.
- Pricing
Botfolio’s pricing depends on the trading value users have per time. There are 4 tiers with different trading value ranges. Besides this, they charge a fixed quarterly performance fee of 15% on profits.
Tier 1: For portfolio values of $1,000- $3,000, users are charged $5 per month + 15% quarterly performance fee on profits
Tier 2: For portfolio values of $3,000- $10,000, users are charged $10 per month + 15% quarterly performance fee on profits.
Tier 3: For portfolio values of $10,000- $50,000, users are charged $15 per month + 15% quarterly performance fee on profits.
Tier 4: For portfolio values of $50,000- $100,000, users are charged $20 per month + 15% quarterly performance fee on profits.
The platform’s accepted payment methods are Ethereum, Bitcoin, Litecoin, BitcoinCash.
- Trading Support/Community
If users have any questions or issues while using the platform, an email can be sent for support to the address listed on Botsfolio’s website.
- Connected Exchanges
The trading bot only supports one exchange: Binance
3. TRALITY
- Introduction
Trality is a trading platform that enables traders to build their trading bots from scratch or use already existing rules on the platform. Trality is for experienced, advanced traders and also casual traders looking to use algorithmic trading to make a profit. Trality has a Python Bot code editor to enable python users to create their bots. For less advanced users who do not know how to code, they have a rule builder.
- Level of Complexity
Trality has a minimalist and easy-to-use UI/UX for users. Some of its features are best suited for advanced traders but its rule builder can be used by people less-knowledgeable in crypto trading.
- Trading Bot Technology (Features)
- Python Code Editor
Trality provides users with an in-built python code editor that can be used to create bots from scratch and write their own strategies. This is useful for advanced traders who have knowledge of the programming language. The code editor includes some popular libraries like NumPy, Pandas, Tulip, etc.
- Rule Builder
For traders who do not know how to code, Trality provides the rule builder which is an interface that lets users build their trading strategies by dragging and dropping technical indicators. This rule builder makes it possible to create strategies using Boolean logic.
- BackTesting
Trality has a backtesting feature that allows users to test different rules against historical data to ascertain their performance before deciding on launching on the market.
- Security measures
Trality makes use of APIs to connect to users’ exchanges They have no direct access or withdrawal rights to users’ crypto funds. Also, users’ information is encrypted end to end thus no one can gain access to any personally identifiable information of any users.
- Team’s Reputation
Trality was founded in 2019 by Moritz Putzhammer and Christopher Helf who have expertise in Finance and Machine learning respectively.
- Legal Backing/License
There’s no information about registrations or any financial license.
- Pricing
Trality has a four-tiered plan that users can choose from
- PAWN: This is a free plan. It provides users with a maximum monthly trading volume of €5,000, 1 live bot, 1 virtual bot, and log retention of 1 week.
- KNIGHT: This plan costs €9.99/month. Users have a monthly trading volume of €25,000, 2 live bots, 2 virtual bots, and log retention of 1 month.
- ROOK: This plan costs €39.99. It provides users with a maximum monthly trading volume of €250,000, 5 live bots, 5 virtual bots, and log retention of 6 months.
- QUEEN: This plan costs €59.99. It provides users with unlimited trading volume, 10 live bots, 10 virtual bots, and unlimited log retention.
- Trading support/community
Trality has an active telegram page for its community of traders/investors. Users can make inquiries and receive trading support from Trality’s telegram support chat.
- Connected Exchanges
Trality supports the following Exchanges: Binance, Coinbase Pro, Bitpanda Pro, and Kraken.
4. MUDREX
- Introduction
Mudrex is an automated crypto investment platform that allows users to invest either in strategies made by traders, use pre-built templates, or build their system. With Mudrex, you either use their indicator-based bots or create a bot from scratch, or use bots built by fellow traders.
- Level of Complexity
Mudrex has put in the work to ensure beginner traders with zero coding knowledge can use their bot successfully and make profits. The rule builder is based on a visual block logic to connect the different sections of the trading system. Each block can be customized according to the user’s needs.
- Bot Technology/ features
- Drag and Drop Tool: Users can configure their trading strategies by utilizing the drag and drop tool made available by Mudrex.
- Backtesting: Mudrex gives users the opportunity to backtest their trading strategies against historical data to affirm how effective or ineffective it would be before launching it live. The drag and drop feature makes this somewhat easier.
- Template strategies: Mudrex has 7 major trading strategies that users can pick from. They include Ichimoku, Simple MA Crossover, Directional Movement indicator, the Bear Hangingman strategy, Aaron Oscillator strategy, Bollinger Bands, and Stable Coin Oscillator.
- Performance Score: To help users pick a good bot that fits their risk and reward appetite, Mudrex provides a performance score that ranges from 0 to 10. The higher the number, the better the risk and reward for the strategy. Scores below or equal to 4 are considered as poor, 5-7 is considered average while 8 and above is considered good.
- Security measures
Mudrex stores all important information using bank-level AES-256 encryption. All API traffic is secured and goes through SSL and uses TLS 1.2 to prevent third parties from eavesdropping on your connection.
- Team’s Reputation
Mudrex is founded by Edul Patel, Alankar Saxena, and Prince Arora who have experience building previous startups and working in the financial sector. Mudrex is a Y CoCombinator-backed trading platform.
- Legal Backing/License
There’s no information about registration or any financial license.
- Pricing
Mudrex operates a Free Basic plan and a paid premium plan. In the free plan, a user can go live with rules but has an investment limit of $500. However, on signing up for a paid premium plan, which is $19 monthly, the complimentary free limit is extended to $2,500.
On reaching the $2,500 limit on the paid plan, users are charged an investment fee of 0.5% on the amount they invest in strategies through Mudrex’s platform over time.
- Trading support/community
They are selective in which plans have access to customer service. For example, the standard plan can only contact customer service via Email/Discord. They also have a telegram community for their users. However, there is a comprehensive list of answered questions on their support page that is useful for users.
- Connected Exchanges
Mudrex supports 6 exchanges: Binance, Okex, Coinbase Pro, Bitmex, Bybit, and Deribit.
5. Shrimpy
- Introduction
Shrimpy is a crypto trading bot platform that provides automated portfolio management and social trading features to users. Shrimpy enables users to connect to their exchanges and automate their trading. They are also enabled to automatically copy the crypto traders on the Shrimpy platform.
- Level of Complexity
Shrimpy has an easy-to-use interface as it is quite easy for users, especially beginners, to navigate through and use the web-based platform.
- Bot Technology (Features)
- Portfolio Management: Shrimpy lets its users manage their portfolios by leveraging established user strategies, creating other strategies, and automating their portfolios. Shrimpy helps to automate portfolio management enabling things like portfolio rebalancing, stop loss, dollar-cost averaging, etc.
- Social Trading: This allows their users to monitor and follow the strategies of more established traders. Users have the opportunity to browse and search for the top crypto traders and leaders and follow their trade. These leaders in return get the chance to earn money for the copied trades.
- Backtesting: To enable users to get the best for their custom strategies, there is a backtesting feature to see how the strategies would perform in real-time. This gives users the opportunity to iterate until they attain their perfect portfolio allocation.
- Security measures
Shrimpy ensures safety through the use of API keys. Every API key is securely encrypted and stored using FIPS 140-2 validated hardware security modules (HSMs) to protect the confidentiality and integrity of your exchange API keys. Shrimpy only requires the ability to read data and make trades, so users’ funds cannot be directly accessed or removed from the exchange. Users are also encouraged to utilize Two-Factor Authentication (2FA) services to further secure their accounts.
- Team’s Reputation
Shrimpy was founded in 2018 by Michael McCarty and Matthew Wesley.
- Legal Backing/License
There’s no information about registration or any financial license.
- Pricing
Shrimpy has a three-tiered pricing plan. They include:
- Starter: This costs $15 per month and is targeted at those getting started in investing. Users can connect 5 exchange accounts and 3 portfolios per exchange account.
- Professional: This costs $63 per month and is targeted at users who need in-depth control of their investment. Users can connect 10 exchange accounts and 5 portfolios per exchange account.
- Enterprise: This costs $299 per month and is targeted at companies seeking enterprise-level portfolio management. Users can connect 25 exchange accounts and 10 portfolios per exchange account.
- Trading support/community
Shrimpy has a support email that users can contact in case of any issues. It also has a Youtube, Reddit, and Discord community support avenue for users.
- Connected Exchanges
Shrimpy is connected to the following exchanges: Kucoin, Binance, Bittrex, Bittrex Global, Coinbase Pro, Binance.us, Kraken, Poloniex, Gemini, Bibox, Bitmart, Huobi Global, HitBTC, Okex, Bitstamp, Bitfinex