Today we received a message of one of our affiliates. Cryptohopper shared the joyful message that they have reached the milestone of 300.000 users. On behalf of Tradeincrypto.com congratulations for this Dutch company. For us it is a good moment to discuss trading bots.
Of course we first explain what trading bots are and why they can be used to trade in crypto with more return on investment. After that we share some pro’s and con’s of using trading bots. At the end of the post we also share an offer that we can provide on behalf of Cryptohopper to celebrate their accomplishment of 300.000 users.
What are trading bots in crypto?
When you use a trading bot you can provide this bot with a number of parameters. Some suppliers provide a ‘code-free’ service. This means you don’t have to have any coding skills to customize your trading bot. Once the parameters are set the trading bot can be connected to your exchange account(s). Cryptohopper, for example, is usable with various exchanges among which the Dutch Bitvavo exchange.
From that moment on the trading bot will start to scan the market continuously and place automatic trades according to the strategy that you have inserted.
How can trading bots be used to optimize your return on investment?
First of all you don’t have to miss any opportunities. When you’re at work or not interested in following all developments on the cryptomarket at a certain time, your trading bot will be your gatekeeper and make sure action is taken by buying or selling at the moment that’s right according to your strategy.
Furthermore you have an opportunity to rule out emotions. As we discussed earlier this week it’s an institutional insight to trade without the human factor. By using a trading bot you can benefit from this institutional practise.
A final advantage is that trading bots are much more effective multitaskers than we are. This is convenient, especially when your crypto portfolio consists of multiple coins. In such a case trading bots can execute various buy- and sell orders at the same time.
What if you don’t have a strategy or are not sure about the profitability?
If you don’t have a strategy you can find various strategies online. Some trading bot suppliers provide certain strategies. On the Cryptohopper marketplace you can find various strategies (both paid and for free) and see their success rate.
When you do have a strategy but you’re not to sure (yet) whether this strategy is water proof and/or as profitable as you calculated you can use the services of Cryptohopper to test and finetune your strategy without the risk of losing any money.
What are points to consider when using trading bots?
Of course there is no such thing as a free lunch, so there are some cons and points to consider when using trading bots. One of the things that most people forget is that, just as any other machine, a trading bot needs a bit of maintenance every now and then.
In this case you don’t have to be a mechanic, but you need to supervise whether the trading bot is still active and whether your strategy is still effective (for instance after a change of market circumstances).
Furthermore you need to aware of criminals who use the API-keys to get to your funds. By keeping your API-key a secret and disable the opportunity of automatic withdrawals you can manage this risk. When you log in to make your withdrawals it’s a good moment tot check your trading bot.
A last point to consider is that there are many providers of trading bots that will offer you the most effective trading bots (sometimes even pre-programmed with strategies that ‘guarantee’ huge return on investments) for no or low costs. Unfortunately most of them are scammers. Therefore you have to perform an in-depth check of trading bot providers. Cryptohopper has established a trustworthy reputation. As said, 300.000 trading bots can’t be wrong, can they?