Cryptocurrency trading is an extremely high-risk job. Peoplelose a lot of money on exchanges. Even experienced traders can lose theirdeposits when gripped by greed or fear. You can trade manually or use automated crypto trading to achieve your financial goals. We can divide algorithmic trading tools into four types:
- Trading bots on exchanges (Binance trading bot, Kucoin trading bot, and others).
- Copy trading.
- Crypto trading platforms (Skyrex, 3Commas, Stoic crypto, CryptoHopper).
- Algorithmic trading bots.
Let's look in detail at each group.
Trading Bots on Exchange
Over the past couple of years, top crypto exchanges have offered users the opportunity to automate their trading routines. You can find Binance bots, Kucoin bots, and others.
This is the easiest way to start automated crypto trading. You don't need to create a trading strategy, encode it, or create API keys. All you need to do isset up a grid bot or DCA strategy, choose the leverage, and start trading.
If you are new to crypto, this approach is extremely risky. Suggested strategies work well only when the market is calm. The start of a strong trend against you can easily liquidate your position. Only experienced traders can choose the proper settings and exit a position if the scenario is invalidated.We do not recommend using this type of trading automation.
How to use:
The main risk here is the high leverage when using a grid trading bot. If you decide to employ this approach for crypto algo trading, we highly recommend using only a spot account. Unexpected volatility can easily liquidate your position in the futures account. In the spot market, you will not lose all your money, atleast. Next, you need to choose the proper settings. Automated trading bots on exchanges usually work well in a sideways market. If you assume that the market will stay within a range, set up the grid to capture any moves within this range. Be vigilant if the market is about to break out of the range and stop the bot accordingly.
Some exchanges offer crypto copy trading services for theirusers. This is when you copy trades of professional traders.
This is also an easy way to start automated crypto trading. You can choose atrader to copy from the suggested list, ranging them by profitability, winrate, and stability, and choose the best one.
A great equity curve and win rate are not a guarantee that the copy trader willmake a profit for you. Some of them have a great rating because they usehigh-risk trades. Our team tried to find a good trader in copy trading, but allof them caused losses in our deposits.
How to use:
If you havedecided to take this high-risk approach, we recommend using no more than 10% ofyour deposit. Find a copy trader with a gradually increasing equity curve, a reward-to-risk ratio of more than 3:1, and a win rate of at least 45%. Moreover, you should choose a trader who has a trading history of more than 50 trades. If you follow these recommendations, you have a great chance to earn.
Algorithmic Trading Bots
You can build your advanced trading strategy using programming languages like Python or Pine Script.
This is the most reliable way to use algorithmic trading. Here you have the possibility to backtest your trading strategies to ensure they can bring profit in the future. Here, you depend only on the trading data received from exchanges or TradingView.
This method requires a deep understanding of trading strategies, programming,and statistics. It can take more than 2 years to become proficient. Even if you receive great results on backtests and are not aware of how to correctly evaluate strategy results, it can lead to losses.
How to use:
If you choose this approach to algorithmic trading, you have decided to become a professional. Developing a great trading algorithm will take more than two years of almost full-time work. Start by learning the fundamentals of Python or Pine Script programming. Simultaneously, read various books about trading and try testing these methods manually until you find a profitable one. Afterward,you can implement your knowledge in code and develop your trading bot, which will save your time.
Crypto Trading Platform
Many companies suggest automating trading routines using their strategies, such as Stoic crypto, CryptoHopper, 3Commas, Mizar, and manyothers. Our Skyrex SmartBot also belongs to this category. Trading bots connect with your account via API keys, and your money is located in your exchange account. Some exchanges provide a simplified connection with a fast connectoption.
This method doesn't require any knowledge in trading; you only need to createan account on the exchange and deposit money. Trading strategies and risk/moneymanagement parameters used by trading bots are much safer than those usuallyused by copy traders. For example, in Skyrex SmartBot, the maximum monthly loss you can face is -1% of the total deposit, but the three-year history demonstrated an average monthly ROI of +5%.
Some traders want higher risks and rewards, while trading platforms usually provide very conservative risk management. You should remember that high-risk trading strategies often lead to losing deposits.
How to use:
This is the best way for new traders in the market. Trading platform providers usually have their own trading bots with excellent statistics. It's important for such platforms to maintain a great reputation,which is why their algorithms have low risk and high profitability. In the next article, we will compare the most popular bots, and you can choose the best one for you.
The exploration of automated crypto trading reveals several methods, each with its unique advantages and drawbacks. However, for newcomers or those seeking a more reliable and less risky entry into the crypto market, Crypto Trading Platforms emerge as the standout choice. These platforms, exemplified by names like Skyrex AI Bot, CryptoHopper, and 3Commas, offer user-friendly interfaces that don't require extensive trading knowledge. Their primary appeal lies in their conservative risk management strategies, which are designed to protect the user's investments. While some may seek higher risks for potentially greater rewards, these platforms maintain a cautious approach, ensuring steady and more predictable returns.
By connecting to your exchange account via API keys, these platforms allow your funds to remain within your control, while their automated systems manage the trading activities. Notably, platforms like Skyrex AI Bot demonstrate impressive track records, such as limiting potential losses to a maximum of -1% monthly, while achieving an average monthly ROI of +5% over three years. This balanced approach makes Crypto Trading Platforms an ideal choice for those looking to grow their investments steadily without the need for deep trading expertise or exposure to high risks. In essence, they offer a secure, passive income avenue, allowing individuals to focus on their regular jobs while gradually building a robust crypto portfolio. This method could potentially enable users to sustain themselves on their crypto income within 4-5 years, making it a prudent and appealing option in the realm of automated crypto trading.