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Crypto trading bot, sounds interesting right? If you’re curious about it, you’re in the right place!
After you’ve purchased some Bitcoin, you may be wondering what to do next. You may have an increased interest and curiosity in the world of cryptocurrency after purchasing Bitcoin. You start wondering how you can get more crypto coins. When people show an interest in this, there are generally two things that quickly come to their attention
- Mining crypto coins
- Trading crypto coins
Mining crypto coins
There’s a lot of information on the internet about mining crypto coins. We will not go into it in this article. In our opinion it is way too complicated and expensive to start mining. We do not recommend you to focus your attention on mining. It is best to avoid mining contracts because in most cases they do not deliver as promised.
Trading crypto coins
Buying and selling crypto coins is something that can bring you some nice profits. There’s a lot to learn about trading. Don’t allow yourself to be distracted by Youtubers claiming that you can easily become a millionaire. Crypto trading requires a gradual process of learning, whether you trade manually or by using an automated crypto trading bot. Both can be a great way of increasing the amount of Bitcoin you own.
You can trade Bitcoin with other crypto coins on the Binance cryptocurrency exchange. The goal is to buy and then sell with profit. You are basically buying back your Bitcoin with a profit. If the price has risen then it will in fact increase the amount of Bitcoin you own. Note: You will need to consider changes in exchange rates and transaction costs on Binance (which are quite low).
Example of trading crypto coins
Let’s use an example. You want to purchase another coin on Binance with your Bitcoin. In this example you are selling 1 Bitcoin and buying Litecoins with it. In the following hours the Litecoin price shoots up by 5% while Bitcoin’s price does not fluctuate a lot. Now you can trade your Litecoin back to Bitcoin, but with a 5% profit (approximately 1.05 Bitcoin minus transaction fees). This means that within a few hours you’ve increased the amount of Bitcoin you own by about 5%! Another possibility, of course, is that the price of Litecoin drops. You can then either wait till the price increases, or sell with a loss.
On Binance you can trade your Bitcoin with hundreds of other crypto coins.
What is an automated crypto trading bot?
So far we’ve been discussing the basic idea of trading manually. You can already see that this way of trading requires some knowledge and can be quite stressful. Professional traders look at specific movements and patterns in the market by analysing the charts. Based on their insights they make certain trades. The good news is that some of that professional trader’s knowledge has been made available through automated crypto trading bot software. The crypto trading bot responds to certain signals to buy or sell a coin.
Through crypto trading bot software you can literally trade 24/7. Based on the settings you’ve provided or selected, the bot will automatically trade your Bitcoin for another crypto coin with the aim of gaining profit, similar to the Litecoin example we mentioned earlier. Just like with manual trading, you must take into account and accept that there is also the possibility of making losses on certain trades. It is important to allow the crypto trading bot to sell your coin at a loss because this will allow you to take on another trade, hopefully a profitable one. A stop loss allows you to prevent an even greater loss.
Trading with a bot like Cryptohopper is a great way to make profits. This is especially interesting for people who have busy lives and are not able to be fully focused on trading. However, it is important to understand that making profits with a crypto trading bot is not as simple as it seems. Trading in this way requires some knowledge of cryptocurrencies. You will also need to have an understanding of bot settings, for example: at which point and in which conditions will a coin be purchased and sold?
Understanding these settings can be quite difficult, especially if you are new to trading. The good news is that there are some alternative options:
-Purchasing a trading strategy
Both of these are actually templates with settings created by experts. Within Cryptohopper, there are many strategies and signals that you can purchase. Even if you purchase strategies and/or signals, you will still need to keep a close eye on the bot. There are times that market conditions are not favourable for trading, even with signals and strategies. The good thing is that you can manually ‘turn off’ the trading bot en HODL all your positions until market conditions are more favourable.
We’ve mentioned Cryptohopper as an example of an automated crypto trading bot. Cryptohopper is just one of many crypto trading bots on the market. Our experiences with Cryptohopper have been largely positive and we would also recommend it to others. You can run a free 7-day trial with the Cryptohopper trading bot. One of the great things is that you can do paper trading (fictional trading). You are not using actual coins. This is a great way to get started and to get familiar with Cryptohopper without any risk.
Want to know more about Cryptohopper? Take a look at What is Cryptohopper and how do I start trading in Cryptohopper
Disclaimer: This is not trading or investment advice. The above article is for educational purposes only. Please do your own research before purchasing or investing into any cryptocurrency.