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Exposing How Cryptocurrency Trading Robots Work

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Of all the fintech LTD software out there, the one surrounded by the most mystery and that sparks the most interest is the trading bot, especially in the cryptosphere.

In the cryptospace, it has become some sort of endemic to talk about bots and try to use them. Many things, including the good and bad behavior of investors, have been associated with robots. The Willy Bot was manipulated at Mt. Gox, bots are everywhere in Bitfinex, and traders always talk about how profitable bots are for them and how much money they are making from their proprietary arbitraging bots, otherwise known as arb bots. Bots are a real thing. They are here. However, I suppose the most important question on your mind is if they’re real or not.

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Also, read Ripple vs Bitcoin: A Comparison Guide

A Primer

The idea that we could have robots do everything for us started as far back as the 1950s. There would be no more housewives, no more bus drivers, no more factory workers and maybe none of the more specialized professions as well, such as doctors, engineers, lawyers and so on.

In a way, we’re facing a kind of deja vu now, in the 2010s. We’re being promised trading bots that can eliminate the need for work for traders around the world. If these things are worth all the hype, then they can make money for you no matter how terrible a trader you are. However, we all know it’s never really that simple, don’t we?

There are many trading bot categories out there. The most popular type, perhaps, is the arb bot, which makes profit off of tiny price differences that occur naturally across exchanges. If you take bitcoin (BTC), the price will be a little different as you move from one exchange to another. If you go to Bitstamp, you might find that the price is usually a little lower than the price at Bittrex. The way cryptocurrencies move across the exchanges is usually the same, however. When there’s a general rise in the price of one crypto, it rises across all the cryptos. You rarely ever see the price rise in one exchange and then fall in another. If that happens, traders quickly swarm in and buy at the remarkably low price on the exchange where price is falling and that momentum will make it shoot up.

If there’s a large buy order on Binance that makes a crypto shoot up, such as bitcoin, then the price quickly shoots up across other exchanges because traders move in to take advantage of that. Those traders are doing something called arbitrage and, if those traders are bots, they are called arb bots.

Just How Profitable Are Bots?

To start with, you’re not going to make any money trading cryptocurrencies if you don’t already have a sizeable amount of crypto, to begin with. If you’re going to be using an arb bot for your bitcoin, you’ll need to deposit that bitcoin across quite a few exchanges. These exchanges should be connected to your arb bot via a reliable application programming interface. Remember, even when you do have a sizeable stack, you can end up making relatively small profits. That’s how arbitrage works.

Some traders say they make about 0.25 BTC a day with their arb bot. However, to do that they have to use nine BTC. They make that profit simply by taking advantage of inefficiencies in the market. However, as you can see, the amount of capital it takes to make even a small amount of BTC is a lot.

Arb trading is like going online and playing Texas hold‘em poker. With online poker, you need to stick to your set of rules and consistently take the small advantages that are offered to you, folding whenever the risk is too big and never going all in. You won’t make a killing in a single game. However, in time, your profits will build up and you will have a growing stack.

It’s pretty much the same with arb trading. You need to set up your bots well if they’re going to make you any money. You do have to be patient, however, and stick to your set of rules. Crypto bots aren’t unlike those forex programs you sometimes see forex sales associates trying to push to you. If those guys are as rich as they tell you they are, why are they so eager to sell their knowledge, rather than keep it to themselves and reap the profits alone?

Trading Bots Currently on the Market

Many trading bots are being pushed on the market. Most of the companies selling them, usually token companies, tell you that the robots are based on “algorithms,” that they are much “smarter” than your average robot, and that they use the most advanced “AI” or “machine learning.” When it comes to tokenized projects, I can’t tell you for sure if they’re profitable or not. If they are profitable, I can’t tell you how profitable they are. If I were to find a platform that consistently gave me reasonable returns, they don’t even have to be high, and then I’m sure I would be first to recommend it. I wouldn’t even have to, though. Crypto traders watch the space very vigilantly. If such a platform emerged, they would rush to it in droves. However, it doesn’t exist just yet, so I won’t hold my breath.

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Don’t get me wrong. I’m sure there’s a lot that machine learning has to offer to crypto trading. However, we are still in the fetal stage of artificial intelligence and anyone claiming to be able to deliver heaven using what we currently have is selling you snake oil.

There are some legitimate trading bots out there that a lot of skilled traders have tried and swear by. Here they are:

  • HaasBot: This bot will trade automatically for you across a range of exchanges and is based on a monthly subscription with the lowest being 0.073 BTC
  • GunBot: This crypto has subscriptions as low as 0.002 BTC on the lower end and 0.15 BTC on the higher end. It links to a variety of exchanges and supports a variety of trading styles
  • Cryptohopper: This one is priced in dollars and costs $19 a month and is also cloud-based
  • ProfitTrailer: This one supports averaging down and costs $35 a month
  • Cryptotrader: This one needs to be programmed and costs about 0.0048 BTC for the Pro version
  • Gekko: This one is free and open source; you need to program it, however, so it is only as good a trader as you

If you’re looking for easy money, don’t come looking here. Bots still need you to work hard. First, you have to find a reliable one, and then you have to use it judiciously. These are tools and not slaves. You should also always be ready for things not going your way. Even bots will lose money.

PG

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