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While we all can appreciate the emotional rush from watching the crypto markets on a daily basis, we can also admit that it may not be the most efficient way to trade. That’s where algorithmic crypto trading bots can help.
Programming an open source crypto bot capable of making trades based on data and trends rather than emotional impulses allows crypto traders to grow profits, minimize risk, and limit losses across multiple exchanges. Trading bots allow traders to receive passive income from fully automated trades 24 hours a day, allowing you to take advantage of hours you may not be available to trade.
There are a number of platforms that support algorithmic trading, but below are some of our favorites bots that work.
What kind of trading bots are there?
Arbitrage strategy entails simultaneously buying a coin on one exchange and selling it on another. For example, if a bot notices LTC selling for $300 on Bittrex and for $312 on Coinbase Pro, the bot will buy LTC on the exchange where it’s cheaper and sell it on the other exchange for a profit. In the beginning of the cryptocurrency market, this was one of the first strategies crypto traders utilized to make quick, safe profits.
Market makers both buy and sell a token in order to help the market discover a price. The advantage of market making is that it can help prevent large swings in price.
This can involve making both buy and sell limit orders near the existing market price, and as prices fluctuate, the trading bot will automatically and continuously place limit orders in order to profit from the spread. Many market making bot traders are actually affiliated with the projects they’re trading.
How do you file taxes for crypto bot trading?
When choosing a bot strategy, be aware of how many trades the bot will be making. High frequency trading bots that may make dozens or hundreds of trades a day can result in tens — or even hundreds — of thousands of transactions. This adds complexity to tax calculations; however, TokenTax can handle such trading on the appropriate crypto tax plan.
What are the best free crypto trading bots?
Blackbird Bitcoin Arbitrage
Blackbird is a unique bitcoin trading bot that utilizes arbitrage deals. Arbitrage bots come with the advantage of not selling tokens that you own but rather looking to utilize the arbitrage strategy to find gaps in the market and take advantage of them.
Blackbird works with all market conditions because it isn’t affected by the volatility of the market. So if bitcoin loses half its value over night, it won’t affect the bot’s trading strategy. This strategy works in parallel on different exchanges, meaning that there are no latency issues, and your bot can instantly take advantage when it finds one. This bot is exclusively for bitcoin trading.
Catalyst is a bot built using the Python programming language. A major benefit of using Catalyst is that it's heavily customizable . Developers can build and test complex custom strategies and analyze them on Enigma's dashboard, which provides a number of valuable metrics about each strategy. Users can then share this data with other users and compare notes on which strategies are the most valuable.
ZenBot is another bot service we would recommend to first time users. It's an open source platform that supports a wide range of exchanges including Bitfinex, Bitstamp, Poloniex and Kraken.
ZenBot gives access to premade strategies like Gekko and also has advanced features including paper trading to test strategies in real-time, configurable order types, and a flexible sample period and trade frequency. Although the platform has not had as much maintenance as we would have hoped up to this point, there is a way to download and modify the code if needed. That said, according to the GitHub page, Zenbot 3.5.15 has made a 1.531 ROI in just three months.
What are the best paid crypto trading bots?
Unlike the other bots on this list so far, Shrimpy costs money to use and for good reason. Shrimpy offers a number of advanced features including a focus on portfolio management, portfolio rebalancing and cross exchange performance monitoring. It is also a platform that both novice and advanced traders have found to be easy to use.
This, along with an elite number of supported exchanges, have helped Shrimpy set itself apart, and it’s seen as one of the premier automatic trading platforms.
Haasbot is a more advanced bot, reflected in its price starting at $254 per year. However, Haasbot has something to offer that the others do not. Besides supporting a large number of cryptocurrency exchanges, Haasbot can give you access to multiple bots that can implement trade strategies on different exchanges and currencies simultaneously.
3Commas is a more advanced trading bot with a number of sophisticated trading options built in. While it may have similar features to Haasbot, there is one key feature that stands out: the ability to backtest trade strategies on other portfolios.
This can give you some insight on the strategies of the platform’s most successful users, essentially allowing you to copy their strategies, see how they work, and possibly build on top of them.
3Commas also offers the ability to a number of smart trade functions like Trailing. Trailing allows you to set the price you want the bots to close on a trade at the most profitable position even though the target gain set by the user had already been reached.
3Commas starts at $22 a month and caps out at $79 a month for their pro plan.
Cryptohopper is an advanced paid platform that’s easy to pick up and use right away. It’s a cloud based platform, requiring no installation and allowing for 24/7 trading. The bot also integrates with traders who share their trading signals, allowing users to assign their bot to trade according to these traders’ signals. More experienced users can customize their own strategies.
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