Trading bots have become increasingly popular amongst investors looking for ways to generate profits and beat the market. Crypto trading automation - often referred to simply as bot trading - is the process by which software like Quadency automatically executes your trade orders based on a set of rules.
In this article we will clarify the 3 most important things you need to know about crypto bots:
- How they work
- Should you use them
- Which bots to use
How does it work?
An automated strategy can be as simple as buying a small amount of an asset over a period of time, or far more complex and based on technical indicators.
While creating your own bot is a heavy task, Quadency make it easy with a number of popular, pre-built strategies that you can configure. To get started, all you need to do is to link your exchange account via API Keys to execute trades directly from Quadency. We recommend enabling only the permissions needed for trading (i.e. disable withdrawal permissions), so if you come across a provider requiring otherwise, proceed with caution!
Once your exchange is connected to Quadency, all you need to do is to select the strategy you want to automate and begin configuration.
Quadency strategy configuration workspace
Why use trading automation?
Unlike equity markets, digital asset exchanges operate 24 hours a day, 7 days a week. While day-trading can be a full-time job, crypto bots offer you the ability to trade 24/7 when you’re away from your screen.
Do you remember ever hesitating before hitting the buy/sell order button and missing a trade opportunity? Automation via bots eliminates that emotional charge from your trading experience and executes per the logic they are configured for.
Trading automation also helps traders eliminate repetitive, tedious, and time consuming tasks, while enabling higher trade frequency and opportunities to profit.
Let’s say you want to manually create a Grid Trading strategy to take advantage of the slightest volatility..every time an order is filled you would calculate the price of a new limit order and manually place it as quickly as possible, a near impossible task to do efficiently. Meanwhile, Quadency's pre-built Grid Trader can execute your trades in fractions of a second, thousands of times a day.
Of course traders have to be realistic about profit expectations as any automated strategy is limited by its purpose, available config parameters, and your specific configuration of those paramaters.
What trading bots can I use?
Different automation tools can each help you take advantage of different market conditions and trends. Quadency currently offers two main categories of bots: those based on popular technical indicators, and others based on popular trading strategies.
Technical indicator based bots like MACD, Bollinger Bands or Multi-level RSI, follow the evolution of these indicators to execute trades. For example, the Bollinger Bands strategy executes a buy order when the price of a cryptocurrency crosses the lower band and will sell when the profit target is reached.
Strategy based bots act a bit differently. Instead of following technical indicators they automate popular trading techniques such as Grid Trading, Market Making or Portfolio Rebalancing (coming soon!).
There’s a crypto trading bot for every situation and the possibilities are endless. In fact, many developers use Quadency to fully customize any strategy they can imagine with the Strategy Coder.
Crypto trading automation can bring profit opportunities to both beginner and more experienced traders. As Quadency continues to release new bots, we'll continue to ensure they seamlessly execute your configurations at unbeatable speeds across all top exchanges.
Disclaimer: contents of this article are for general market education and commentary and are not intended to serve as financial, investment, or any other type of advice.